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Welcome to Debt Counselling

Are you over indebted? Struggling to pay off your loans and meeting your monthly obligations?

Debt counselling is one of the debt relief measures available in South Africa, introduced by the National Credit Act (NCA) in 2007. Debt counselling is intended to assist over-indebted consumers struggling with debt through budget advice, negotiation with credit providers for reduced payments and restructuring of debts.

This is a great process for anyone with an income and struggling to meet their monthly obligations.

What is over-indebtedness?

Over-indebtedness occurs when a consumer is unable to repay all financial obligations in a timely manner and/or where total debt repayments exceed net income (“take-home pay”) after living expenses have been paid for.

 

 

 

 

 

 

 

 

 

How does it work

How does Debt counselling work?

Once declared over indebted and accepted into debt counselling the following will happen:

You will be protected from legal action for a period of 60 days from the day of application and after the arrangement has been concluded, as long as you pay according to the new arrangement;

All your creditors will have to stop calling you and will liaise with your debt counsellor;

You will be listed with the Credit Bureau as being under debt counselling.

How can Debt counselling help you become debt free?

While you are under debt counselling you will not be allowed to get any further credit until you are issued with a Clearance Certificate- once you have satisfied your obligations as per the Court or Tribunal order and in line with the National Credit Act.

Debt Counselling Fee GuidelinesApproved Fees

1. A Debt Counsellor may receive the following fees in respect of consumers who have applied for debt counselling:

1.1. An application fee, limited to the amount prescribed in terms of Schedule 2 (2) of the Act, recoverable directly from the consumer upon receiving an application for debt review;R50

1.2. A rejection fee of R300.00 (excluding VAT) in respect of consumers whose applications have been rejected in terms of section 86(7)(a);R300 (excl vat)

1.3. A restructuring fee of the lesser of the first instalment of the debt re-arrangement plan in respect of a consumer whose applications have been accepted in terms of 86(7) (b) or 86(7) (c).

Maximum allowable fee for a Single Application (Once off)R6000 (excl vat)

Joint Application (Once off)R6000 (excl vat)

1.3.1. 100% of the fee is payable at the first instalment.Yes

1.4. Should a Debt Counsellor fail to submit proposals to Credit Providers or refer the matter to a Tribunal or a Magistrate Court within 60 business days from date of the debt review application the Debt Counsellor has to refund 100% of the fee paid by the consumer (excluding the application fee).100%

1.5. A monthly after-care fee payable to the DC5% up to a max of R400 (excl VAT) for the first 24 months, thereafter reducing to 3% to a max of R400 (excl VAT)

1.5.1. Payment of the monthly after-care fee is to commence in the 2nd month after the amount in 1.3.1 above has been paid.Yes

1.6. Should the consumer withdraw from the process after completing stages 1.3 above, a fee equal to 75% of the restructuring fee as per 1.3 above is payable by the consumer.Yes

1.7. Legal FeesA legal fee for a consent order of R750. Any additional legal fees to be negotiated separately with the consumer and the DC must be able to produce pro-forma invoices.

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