When you are struggling financially and are unable to meet your monthly debt repayments, Debt Counselling is a way of providing you with relief in the form of reducing your monthly instalments as well as interest and fees. A Debt Counsellor has to be registered with the NCR and have an NCRDC number.
Advantages of Debt Counselling:
- 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;
- Your assets will be protected from repossession;
- All your creditors will have to stop calling you and liaise with your debt counsellor;
- Fees and interest can be reduced ;
- Every payment reduces your debt;
- Once you have paid your short term and unsecure credit agreements and cleared the arrears on your home loan you can be issued with a Clearance Certificate;
- Your credit bureau record will be cleared once you have been issued with a clearance certificate.
Things to Note about Debt Counselling:
- Once you have been declared over indebted you cannot cancel the process, unless you go to court;
- You will be listed at the Credit Bureau as being under debt counselling;
- For as long as you are under debt counselling you will not be allowed to get credit until you are issued with a Clearance Certificate;
- It takes commitment to stick to the process.
The overall objectives for the DEBT COUNSELLOR are to:
- Assess the full extent of your debt situation and your affordability to repay your debts at an agreed reasonable amount;
- Provide a debt remedy that:
- Provides you with an acceptable standard of living while repaying your debts according to your affordability – this includes retaining the home and a vehicle where possible;
- Provide you with an agreed, affordable and realistic monthly budget in order to resolve the situation in the shortest possible time;
- Provide a repayment scheme acceptable to your creditors and confirmed by the Court;
- Prevent repossession of assets where possible;
- Rehabilitate you without detriment for the future; and
- Allow you to get on with your life.
The overall objectives for YOU should be:
- To work honestly and openly with the debt counsellor;
- Declare all assets and liabilities – including all incomes and debts, and including bonuses and salary increases;
- To pay the registration and debt counselling fees as disclosed at the first meeting;
- To adhere to the agreed instalments and to pay these at the agreed dates;
- To keep in regular contact with the debt counsellor for the full length of the agreement; and
- To agree and commit to the debt remedy – this may include surrendering credit cards, closing accounts and realising some assets.
The overall objectives for your CREDITORS should be:
- To work with the debt counsellor to assist in the normalisation of the debt;
- To favourably consider a reasonable repayment proposal;
- To ensure the consumer is assisted in a fair and unbiased way throughout the process of repayment;
- To assist the consumer to rehabilitate as soon as possible; and
- To assist the consumer to restore his/her credit worthiness as soon as possible.