How debt counselling works

Debt counselling is an effective way of helping people who are struggling with debt. Unfortunately, a lack of understanding about the process, misinformation and concerns about being stigmatised mean some consumers don’t seek help or leave it too late.

What is debt counselling like with an NDCA member?

These are testimonials received by our member companies:

“I knew I had hit rock-bottom when I could not afford to pay for my child’s school fees, buy groceries and keep to my family’s monthly needs. The [debt counselling] process was very simple, and the consultants were so welcoming and helpful. And I was so happy when my installments went down from R11000 a month to only R6500 a month. At last, I had some money to live on each month. Debt review is not hard at all, but you must learn to live on the money that you have and not on credit. I knew this was for my own good and it is definitely worth it. Your company not only reduced my instalments, but you also rehabilitated me.”

“Before joining debt review, I was incredibly weary of doing so because of the negative stigma and reviews found while doing research online. It wasn’t until I contacted my current debt counsellor and had a comprehensive explanation of what and how the process works, that I truly understood what it was, and I had to do to get my finances back on track. I am 3 months away from being debt free and I have never been happier! Debt review works!!”

“Month ends were the worst time of my life because that was when credit providers would call to ask when I will make payments, I would lie and make payment arrangements just to get them off my back, but I knew that I was not going to pay because I just could not afford to pay them. I would borrow money from one loan shark to pay another loan shark and the cycle never stopped. Your company helped me a lot because you told me that there is no need to talk to my creditors anymore because all of them are handled by you. I have been under the debt review program for 5 years and I have never experienced any problems. I made sure to pay every month and that has helped me a lot because I am now debt free.”

“I first heard about you on the radio and I decided to take my chance and seek help from you. I sent your company an SMS and they called me; the consultant that I spoke to was very friendly and informative. Your company really helped me because you were able to decrease my monthly instalments by half. When I completed the debt review process, I was able to buy myself a brand-new car and my name was removed from the credit bureau. I would really like to thank you for what they did for me.”

“An absolute superstar! Thank you for being so efficient, attentive, professional and patient. It seems to be that I did not understand the process correctly. After stressing, sending emails and making calls, your company came to my rescue. You explained the process simply and in detail so that I could truly understand. I knew the moment I spoke with you that my financial worries would be resolved. I felt at ease. Thank you again for assisting me, firstly for phoning me back and answering every question with ease (I needed that as my emotions were high and I was starting to lose hope). Such a pleasure speaking and dealing with you.”

“I would like to thank your organisation very much for the help you provided this morning and your assistance in getting the balance of my account through your credit advisors. I really appreciate your organisation because you do as you promise and make sure you deliver before the end of the business day. I am always so grateful for the help I receive from your company regarding my financial circumstance. Thank you very much once again.”

Our members

What debt counselling process can you expect from our members?

Application
When you contact a reputable debt counsellor you will be given a free debt assessment to determine your level of debt and whether debt counselling is a potential solution for you.
If the assessment determines you are over-indebted and could benefit from debt counselling, you then decide whether to formally apply.
Protection
If you decide to go ahead, the debt counsellor will do most of the heavy lifting by informing all your creditors and the credit bureaus - via the National Credit Regulator’s debt help system - that you have applied for and are undergoing debt counselling. This helps alleviate a lot of stress as creditors should then deal directly with the debt counsellor and not harass you.
Lower rates negotiated
As part of the process the debt counsellor negotiates reduced monthly payments on all credit agreements that fall under the National Credit Act. This restructuring of debt is done within defined industry parameters and strikes the balance between your ability to pay and your overall debt levels. It is not something most people can easily or efficiently do on their own.
Once more affordable repayment terms are negotiated, your rearranged debt is approved at a court or the National Consumer Tribunal to ensure the renegotiated rates are fixed for the duration of the debt counselling. This means creditors cannot change the terms or demand higher payments.
Single monthly payment
You will make one affordable payment each month, via a debit order or debicheck transaction, which is distributed to creditors included in the debt counselling for the duration of the plan.
All National Debt Counsellors’ Association members have client-service staff who are available throughout the process to offer advice and support.
Debt counselling usually lasts for between three and five years, depending on the amount of debt, the arrangements the debt counsellor is able to negotiate with creditors and what you can afford to repay each month.
Should your financial circumstances improve you can increase the monthly payment or pay a lump sum to reduce the period or end the process. This is encouraged.
Clearance certificate
When the payment plan is successfully completed you will receive a clearance certificate confirming all the accounts listed under the debt counselling are paid up. Home loans are the exception. These do not need to be fully paid but must be up to date. The debt counsellor will ensure that the credit bureaus receive the certificate.

Commonly asked questions

What exactly is debt counselling and is it something I should consider?

Debt counselling was introduced as part of the National Credit Act in 2007. It helps consumers repay their outstanding debt through an affordable repayment plan that is agreed with all creditors. All creditors participate in debt counselling. It is a regulated, legally protected process that helps consumers get back on their feet. If you are struggling to pay your debts on time or are feeling distressed about your financial situation, you could benefit from talking to a reputable debt counsellor.

Who can apply to debt counselling?

Any individual who is unable to pay their debt and has a source of income is eligible to apply for debt counselling.

What type of debt can be included in debt counselling? Can I include my municipal debt? What about school debt? What about my company’s debt?

All credit granted to an individual as part of the National Credit Act (NCA), including bonds, vehicle finance, personal loans and other types of debt can be included as part of the debt counselling. Municipal and NSFAS debt unfortunately is not. Nor is company (non-personal) debt.

What happens to my bond if I apply to debt counselling? What about my car?

Bond and vehicle repayments can be included in debt counselling, so you are not at risk of your home or vehicle being repossessed during the process. For bond repayments, interest and repayment amounts are reduced for the term of the debt counselling process. Once it is completed the interest and repayment amounts revert to their original values.

How do I apply?

The first step is to choose a reputable debt counsellor, such as a National Debt Counsellors’ Association member. All members have websites and you can submit a free call-back form. They will then call you and do a free assessment. If the assessment indicates you are eligible, you may choose to apply for debt counselling.

How do I choose a debt counsellor?

Make sure the debt counsellor is registered with the National Credit Regulator. All debt counsellors must be registered and registration information can be found on the National Credit Regulator’s website.

Ask the debt counsellor if they use the Debt Counselling Rule Set (DCRS) system, which all National Debt Counsellors’ Association members use. It is the industry gold standard and benefits consumers and creditors alike by significantly lowering interest rates and reducing the time it takes to complete the process. In some cases, interest rates can be lowered down to 0% for unsecured credit (credit card, personal loan, retail loans etc.) The DCRS system provides significant financial relief for consumers. You should insist on a debt counsellor who uses the DCRS system.

Find out if the debt counsellor has a client-service team to support you during the debt counselling journey — you will need support along the way.

Ask the debt counsellor if they belong to an association — generally reputable debt counsellors belong to associations (such as the National Debt Counsellors’ Association) which uphold high standards.

How do the debt repayments work and what does it cost?

You will make one affordable repayment each month that is based on what you can afford. This is paid to an independent Payment Distribution Agency (PDA) — overseen by the National Credit Regulator — which distributes the money on your behalf to all the creditors included in the debt counselling plan. The debt counsellor would normally nominate the PDA.

Debt counselling is regulated and all the relevant fees are built into the single payment amount. The National Credit Regulator sets the fee guidelines. The system is efficient — 90% of the renegotiated debt payment goes directly to the creditors during the debt counselling process.

How long does the process take?

Debt counselling usually lasts between three and five years, depending on the amount of debt, the arrangements the debt counsellor is able to negotiate and what you can afford to pay each month.

All reputable debt counsellors should have client-service staff who are available throughout the process to offer advice, support and communicate with creditors.

Can I still apply for credit while under debt counselling?

No. Only once you have completed the programme and received a clearance certificate can you again apply for credit. Then it is advisable to draw up a realistic budget and discuss this with the debt counsellor or financial advisor before applying.

Can I use my credit card while under debt counselling?

Credit cards cannot be used while you are under debt counselling as credit card debt becomes part of the debt repayment plan. Once you complete debt counselling, you can apply for a new credit card.

Will I be blacklisted if I apply for debt counselling?

It is important to understand that there is no such thing as blacklisting. When people get behind in their payments this negatively affects their credit score. Lenders and other financial-service providers are reluctant to lend or do business with people who have poor credit scores as they are considered higher risk — this is the basis for the phrase being blacklisted.

If you apply for debt counselling, you will be registered with credit bureaus (via the National Credit Regulator’s debt help system) as being under debt counselling and will not be eligible for new credit while you are under debt counselling.

When you have completed the process and received your clearance certificate you will again be eligible for credit.

I am married. If I apply to debt counselling, does my husband also need to apply?

Knowing your marriage status is important for debt counselling. If you are married in community of property, you and your spouse are jointly liable for debt (regardless of whose name the debt is under) and therefore would need to apply to debt counselling jointly. If you are married out of community of property (with ante nuptial agreement), then you are responsible for your own debt only and therefore your spouse does not need to apply to debt counselling (however, they can choose to apply).

Can I cancel or leave debt counselling?

Your debt counsellor will work on your behalf to secure the best repayment plan with all your creditors. Often this means getting significantly reduced monthly payments that are secured by your debt counsellor. A reputable debt counsellor will intercede with creditors on your behalf and support you through the debt counselling process until you receive your clearance certificate.

Your debt counselling journey is complete when all your vehicle debt and unsecured debt (credit card, personal loans, retail accounts etc.) is paid off. It is not possible to unilaterally “cancel” the debt counselling process.

During the debt counselling process, you can make direct payments to creditors. Doing this means you may lose the protection given by the debt counsellor and may fall behind on your payments.

The National Debt Counsellors’ Association discourages direct payments because you will no longer be able to rely on the debt counsellor’s expertise and support.

Unfortunately, without the support of a debt counsellor, people who choose to leave the process often struggle to meet the terms that were agreed with the creditors. Trying to do so on your own can have long-term and serious implications for your future financial security.

If I’ve successfully completed debt counselling will I be able to get credit again?

When you have paid up all your accounts, a reputable debt counsellor will use the paid-up letters from creditors to create a clearance certificate. This, along with the paid-up letters, is then sent to all the major credit bureaus. The debt counsellor must then also update your debt review status to ‘clearance’ on the National Credit Regulator’s Debt Help System. Once all these steps are completed you will no longer be listed as being under debt counselling and will be eligible to access new credit.