Debt Counselling is a process which became law back in 2006. The Department of Trade & Industry conducted extensive research to determine the causes of over indebtedness. Soon after this, the new National Credit Act (NCA) was introduced. The National Credit Regulator became responsible to regulate the entire credit landscape (This included for example Register Credit Bureau’s, Credit Providers, Debt Counsellors) One of the most important objectives of the NCA was to ensure that all role-players would conform to, and comply with the NCA. Debt review is part of the NCA and section 86 of the NCA allows for a consumer with credit agreements with registered credit providers to apply for the restructuring of his/her accounts in an effort to alleviate the danger of having an impaired record, repossession of assets and still ensuring that debt obligation is fulfilled by the consumer.
Once a consumer has consulted with a Debt Counsellor (DC) it is the duty of the DC to make a determination by the DC whether or not the consumer is over indebted.
The over indebted consumer can then formally apply for debt counselling by completing application form through the DC. The DC will conduct an assessment of the debtors financial position (including an income and expenditure assessment) The DC will then draw up a proposal which will include new repayment instalments and terms to the consumer’s creditors. The DC will then refer the debt review application to a Magistrate to grant a debt review order. Should the court be satisfied with the proposal & negotiations, it will grant an order and formal restructuring of all the consumers accounts will be finalised.
The documents required for a debt review application are normally an ID Copy, 2 or 3 months bank statement, copy of credit report (which the DC will usually help the debtor obtain) and Proof of Income (e.g. Pay slips)
Consumers must be aware that the moment they start missing or skipping their account payments, they should immediately consult with a DC to & consider applying for Debt Review to safeguard their assets.
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