What is Debt Counselling?

Debt counselling is an intervention mechanism for over indebted consumers.
A consumer can seek the assistance of a Debt counsellor on his/her own accord or can be referred to one by a court or by the National Credit Regulator.

Debt Counselling process

If a person cannot pay all his/her instalments timorously and does not have enough money left over to pay for necessary living expenses, he/she is most probably over-indebted.
Such a consumer can be referred by the Court or may apply to a Debt Counsellor to be declared over-indebted.
The Debt Counsellor must notify all credit providers and credit bureaus of the application then evaluate the consumer’s indebtedness.
If the Debt Counsellor determines that the consumer is over-indebted, the counsellor may recommend to the Magistrate’s Court that one or more agreements be declare reckless and/or that the consumers repayments be rearranged by extending the contract and make the payments smaller. If the creditors all agree, this procedure can be voluntary and no court order is necessary.
A creditor who receives notice of court proceedings for over-indebtedness or notice from a Debt Counsellor of debt review, MAY NOT ENFORCE the agreement until a determination by the court or Debt Counsellor has been made.
A consumer may not make any further debts until all debts have been paid in full in terms of the rearrangement or the Debt Counsellor or Court decided that the consumer is not over-indebted.

A debt counsellor is anyone who is authorised by legislation to offer assistance to consumers who have debt-related problems.

Act as a mediator between credit providers and indebted consumers. Assess a Consumers state of `indebtedness.
Facilitate debt re-arrangement with Credit Providers.
Make recommendations to Credit Providers and/or Magistrates Court.

A consumer who has settled all his/her debts in terms of a debt restructuring must receive a Clearance Certificate from the Debt Counsellor. This certificate will allow the consumer to have his/her credit record that is held by a credit bureau, cleared. Should a Debt Counsellor refuse to give the consumer the certificate he/she can approach the tribunal to review the decision of the Debt Counsellor.

If you are unsatisfied with the way the credit bureau handled your situation, contact the office of the Credit Ombud (http://www.creditombud.org.za).