Debt counselling 101 – get beyond the shame of asking for help


Our current economic climate has indicated that many of us are living beyond our means. We not only recently saw a VAT increase, but it seems that many retailers have snuck in additional price increase on the back of said VAT increase.

With the cost of living increasing on a continual basis, it’s not hard to see why many people resort to taking out personal loans.

From medical accounts which aren’t covered by medical aid (something we need to seriously address) to car finances, credit card debt and store card accounts going into arrears, the constant cycle of taking out loans to pay off debts is a vicious “borrowing from Peter to pay Paul” cycle that never ends.

But what do you do when you’re in over your head and you can no longer afford to pay back the debts you’ve incurred?

That’s where debt counselling comes in.

Debt counselling. Dirty words to some, but a system that could help you in the long run.

Now it’s not an ideal option for anyone – in fact many shy away from it because not only CAN IT FEEL humiliating to seek out help, but because your name and reputation with the various creditors you owe money to is at risk

However, it needn’t be that way says Carla Oberholzer, debt advisor and public relations officer at DebtSafe.

One of the biggest problems when it comes to undergoing debt review, is that there is a lot of misunderstanding around it.  So the first thing we need to do is debunk just to give you a clearer idea of what it entails:

READ MORE: Is your cash crashing? Here are 11 tips to help you set financial goals

What is debt counselling:

According to the National Debt Mediation Association, debt counselling is a process that provides consumers with the opportunity to be declared over indebted and get assistance from a registered debt counsellor to negotiate a structured and viable repayment plan to creditors you’re struggling to pay.

It’s a legal process that is designed to offer protection to the indebted, and provides you with a grace period of 60 days from the day you apply for assistance.

Does asking for help mean you have to be ashamed of your financial situation?

Not at all, says Carla. The first thing you need to realise, she says, is that you’re “taking a step in the right direction and being pro-active about managing your finances and debt responsibly.”

She adds that if you wait too long in getting the help you need, you’ll run the risk of receiving court orders and summons without having a backup plan and will then have to deal with potential legal costs on top of being indebted.

Debt counselling is a process that’s completely confidential, so if you’re feeling embarrassed about approaching a credited counsellor for assistance, know that the information you share is between you and the counsellor alone – not even your family would have to know.

Can anything good come from it?

Many people assume that undergoing the process is the worst thing that can happen, but just because it’s a last resort to deal with a financial situation that has gotten out of control, does not mean that it’s the end of the road and that you’ve tarnished your name forever.

We asked Carla why people should look at it in a positive light – she points out the following:

  • Although it is not a nice and easy road, it is a legal process recommended/preferred by the National Credit Regulator (NCR).
  • And, if at a desperate stage in a consumer’s life – it can be the only choice a consumer has at that stage.
  • This process gives legal protection (protecting your assets like a car or house) and immediate cash flow relief (breathing space where there was none).

It should also be noted that your record won’t be a permanent one.

Once you’ve covered and have managed to pay back your debts, according to, your listing as being over-indebted will be completely removed from the credit bureau database.

You will, according to DebtSafe, also be able to apply for credit again after being issued with a  Clearance Certificate that has also been processed by both the creditors as well as the credit bureaus.

Should you be denied when applying for credit after you’ve been issued, you as the client have the right to request a detailed explanation and based on the explanation, may then take further action.

READ MORE: Manage Your Money Like a F*cking Grownup

But what happens when you aren’t successful in your application for debt counselling?

One of the biggest disadvantages of applying for debt counselling is that you run the risk of facing rejection.

According to, if a debt counsellor, after assessing and evaluating all of your income, expenses and debt determines that you’re not over indebted, you will not only be rejected, but you would have to pay a rejection fee.

Carla says at as a debt advisor, she always tells a consumer that COMMUNICATION IS KEY and adds that as a consumer, you still do have the opportunity to talk to your creditors to try and negotiate a new plan.

She adds: “You will be amazed how willing creditors can be to keep a client. If all else fails there is also: administration or sequestration (although as a DC I do not prefer these).”

You can also apply to a magistrates court to apply for an order that declares you as over-indebted.

Another disadvantage of applying for debt counselling is that it doesn’t come for free. Costs involved include (but are not limited to the following):

  • an application fee (usually about R50),
  • a rejection fee (as mentioned above – and approximately R300)
  • a restructuring fee in the region of R6000 (this is basically for creating your payment plan)
  • an aftercare fee  equal to about 5% of the first instalment of your payment plan

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How long does it take for someone to clear their name?

It definitely all depends on the amount owed to creditors, but it can take anywhere between five and seven years.

It should also be noted that:

  • Consumers/clients can make additional payments to their creditors during the process (say for example when they receive a bonus or 13th cheque).
  • They are in control of their own finances and debt review process. And, they control their term – it is not necessarily a fixed term but an estimated term.

Carla adds that individuals can exit debt review once all their debts have been settled with the exception of a home loan or a bond – in other words a person can exit debt review when they only have a home loan or bond left to pay off.

Have you ever undergone a debt counselling process? What was your experience like?

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