National Credit Act 2005

The National Credit Act (NCA) provides over-indebted consumers with a number of options, including using a debt counsellor to help you restructure your debt and negotiate a deal with your credit providers.

The ICS urges you to make contact if you are struggling to keep up with your repayments. The first step is to talk to your credit provider. This is the best time to tackle your debt problems because temporary arrangements can be made to help you avoid defaulting without you having to incur any unnecessary costs or affecting your credit profile.

At the same time you should look at your budget and see how you can cut down on unnecessary expenditure in order to pay off your debt. Remember that if you are in arrears on your payments and you have received a section 129 letter or any letter of demand, you have 10 days to act on the letter. If you do not understand the letter of demand, contact your credit provider for information.

If you are already behind in your payments, also contact your bank as soon as possible to negotiate a solution. Remember, the sooner you take control of your debt problem, the better. Under the National Credit Act (NCA), credit providers may make adjustments to help you bring your payments up to date.

If you are still unable to meet your repayments, despite talking to your bank, you are entitled under the Act to use a debt counsellor to help you restructure your debt. Although your debt counsellor will help you put a debt repayment plan in place to help you pay off all your debt in a reasonable period, remember that once you enter the debt counselling process you will be unable to access more credit until you finish paying off all your debt. You’ll also incur some costs.

According to the NCR guidelines if you earn more than R2500/month, a debt counsellor can charge up to a maximum of R50 upon receiving your application for debt review and a rejection fee of R300. They can also charge a restructuring fee capped at R3000 for re-arranging your debt. The NCR has set up a fund to pay for debt counselling fees for those earning less than R2500 and you should enquire about this from your debt counsellor.

Entering the debt counselling process is not an excuse not to pay your debt. If you stop making payments under the restructured payment plan, you risk facing the cancellation of the debt counselling process and legal action being taken against you .Paying off your debt may mean sacrificing on luxury items for now, but keep the end goal in mind: once you are up-to-date with your repayments, all the listings associated with the paid-off debt will be cleared.