Debt Counselling – Step by Step

A large number of South Africans find themselves in a position of being unable to repay the debt
they have incurred. A person who cannot repay his debt is referred to as being overindebted.
Being overindebted can mean:

  • Your disposable income does not last until your next payday
  • Making late payments, or missing them altogether
  • Borrowing from one creditor to pay another
  • Having no emergency fund or savings plan

If you find yourself in this situation, it is essential to seek assistance before the situation worsens.
This is where debt counselling can provide relief.

What is debt counselling?

Debt counselling was introduced in 2007 by the National Credit Regulator (NCR) to assist consumers
who are struggling to pay their debt.
It is a process that helps you restructure your debt obligations. Under debt counselling, your debts
will be consolidated. You will pay one instalment to your debt counsellor, via a payment distribution
agency (PDA). The PDA then distributes the monies to your creditors on your behalf.
In order to apply for debt counselling, you must have a steady income and be overindebted.
How does it work?

Once you’ve scheduled an appointment with a registered debt counsellor, he’ll assess whether you
are overindebted. Thereafter, he’ll help you draw up a repayment plan. He will allocate reduced
instalments to your creditors. At the same time, he’ll ensure that you have enough for your
necessities. Interest rates will also be restructured, as well as the term of your unsecured debt.
He will contact your creditors and negotiate with them.

This process legally protects you from being hounded by creditors. The debt counsellor’s legal team
will apply for a court order. This then provides you with legal protection against credit providers.
You cannot cancel your debt counselling until all your short-term debt has been repaid.

After all the debt has been repaid, you’ll receive a clearance certificate stating that your debt has
been settled.

Being overindebted can be a scary and unsettling time. The best solution is to admit that there is a
problem and to seek help. Debt counselling can help you manage your debt and ensure that you can
repay it.

For more details about debt counselling, contact One Debt today.