The route to take if there is little hope

2010-09-18 12:45

Debt counselling is for the truly ­over-indebted – those who have little chance of setting their finances straight ­without intervention. At this stage, debt consolidation is no longer an ­option as no further loans will be ­advanced.

All debts should be included in the debt review. A debt counsellor will ­negotiate with your creditors on your behalf and devise a debt ­restructuring proposal.

Paul Slot, head of the Debt ­Counsellors ­Association of South ­Africa (DCASA), says: “You pay a ­single amount to the debt counsellor who then settles with your creditors. In terms of the ­National Credit Act, the debt counsellor has 60 business days to finalise the debt ­review and to obtain a court date.

“During this period, you have ­protection of the National Credit Act and the debt counsellor will provide you with an interim repayment plan.”

But debt counselling is not a ­payment holiday. Slot adds: “Non­payment during the debt review ­process could well mean the end of your debt counselling.”

Debt counselling is not to be entered into lightly as once you are under debt review you will have no access to ­further credit.

However, you do not always have a choice. According to the CEO of ­Consumer Assist, André Snyman, if you receive a Section 129 ­letter from a creditor demanding an immediate payment, you should not approach that creditor but go immediately to a debt counsellor as you will need to get a default credit agreement within 10 days.

In this instance, you have no choice but to seek legal help. If you have no choice but to approach a debt ­counsellor, choose wisely.

A reputable counsellor will be ­registered with the National Credit Regulator (NCR) and would also be a member of the DCASA, which has set standards and guidelines.

Ask a debt counsellor for a copy of the registration number (look for NCR DC) or visit to search for a counsellor.

Additional tips when choosing a counsellor:

  • Snyman advises: “Choose a ­registered counsellor with an office and a website. Make sure they have the necessary tools to support you.

  • “If a debt counsellor asks you for money upfront, except for a R50 ­consultation and ITC (credit check) fee, walk away.

“Fees should be agreed to upfront and an agreement should be signed. You can find fee guidelines on the NCR website. But never, ever give a debt counsellor cash. Be careful of fraud.”

  • Ask your counsellor if he or she will provide you with regular updates ­pertaining to your case.

A court case number must be ­obtained within 60 working days of your signing up. Make sure this is done.

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