WHAT IS DEBT COUNSELLING?
Debt counselling is a formal process governed by the National Credit Act and regulated by the National Credit Regulator. Only debt counsellors accredited by the National Credit Regulator may offer debt counselling services.
Debt counselling assists consumers who are over-indebted to repay their debts in a structured and orderly manner. This is done by calculating an affordable repayment plan and then negotiating that plan with your credit providers. The plan grants you protection from legal action provided that you adhere to the repayment plan. This allows you to focus on regaining financial stability.
As the need for debt counselling often arises from unwise credit management and the resulting accumulation of credit card debt and other debt, debt counselling is sometimes incorrectly referred to as credit counselling, debt consolidation or debt management. Although these terms are not correct, the debt counselling process will assist you to better manage credit and credit card debt.
When you apply for assistance, you will be listed with the credit bureaus to ensure that you do not incur any additional debt. Once you have cleared your debt, your name will be removed from the credit bureaus and your clean credit standing will be restored, paving the way for you to gain a fresh start.
The credit listing is there to protect both your and your creditor’s interests until the debt has been paid.
What are the benefits of debt counselling?
Legal benefits
- Once under debt review, you will be protected from new legal action by creditors,
- creditors are obliged by law to participate in the debt repayment plan and to consider the proposals of the debt counsellor,
- if your circumstances improve, you may increase your debt repayments or settle the debt,
- once you have repaid all your debt, your name will be removed from the credit bureaus,
- debt counselling fees are affordable and are capped by the National Credit Regulator,
- because payments are made to an NCR-approved payment distribution agency, you are assured of a carefully managed and professional service.
Personal benefits
- The debt counsellor deals with credit providers on your behalf, thereby alleviating your stress,
- you are able to focus on your personal, family and work life,
- if your circumstances improve, you may increase your debt repayments or settle the debt,
- you are able to rebuild your sense of self-worth and confidence,
- you are able to ‘walk tall’ as you are dealing with your debt burden in a responsible manner.
- An end to requests for loans and advances against wages and salaries,
- no more administration of garnishee orders,
- less stress, improved productivity and less absenteeism amongst employees,
- improved employee morale,
- a decrease in debt-related family problems.
