A Brief Guide to Debt Counselling

A very large number of South Africans are in debt, and many are behind in their debt
repayments. As a result of the current economic crises, many people are incurring too much
debt that they cannot repay. Not sure if you have too much debt? You can work it out by
calculating your debt-to-income ratio. If both your debt and expenses are more than your
income, this means that you have too much debt. The only way to reduce your debt-to-
income ratio is by decreasing your debt and increasing your income. If you find yourself in
this situation, it is a wise idea to get assistance before the problem gets too large to handle.

What is it?

In 2001, the NCA introduced debt counselling to assist consumers who are struggling to pay
their debt. It is a process that will help you restructure your debt obligations if you cannot
pay them. It is a relief plan that is designed to assist those who are declared over-indebted.
With debt counselling, your debts will be consolidated, and you will pay one instalment to
your debt counsellor, who then pays your creditors on your behalf.

How does it work?

  • Your chosen debt counsellor will do an assessment to check if you are over-indebted.
  • A repayment plan will be drawn up. The plan will include a reduced amount for
    instalments to your creditors as well as ensuring that you will be able to afford the
  • Based on your acceptance of the proposed plan, your creditors are then contacted.
  • As the process is aimed at legally protecting you from being hounded by creditors, a
    court order is applied for. This court order will then prevent the creditors from taking
    legal action against you.
  • After the court order has been granted, you won’t be able to cancel the debt
    counselling programme until all your debt has been settled.

Debt counselling is an effective way to help you regain your financial stability, and peace of
mind. If you find yourself in an endless spiral of debt, take the first important step and
consider debt counselling.

For more details about debt counselling, speak to an expert at One Debt today.