South Africans urged to consider debt counselling

While more South Africans have returned to work as a result of the easing of lockdown restrictions, the National Credit Regulator (NCR) is urging those earning an income, but unable to make ends meet, to make use of debt counselling.

“Although many sectors have been allowed to get back to work, many South African households are in significant financial hardship and others have been struggling to make ends meet, even before the COVID-19 pandemic,” acting Manager for Education and Communication at the NCR, Advocate Kedilatile Legodi, said.

In a statement on Wednesday, the NCR said debt counselling was introduced in the National Credit Act (NCA) in 2007 as a debt relief measure intended to assist over-indebted consumers struggling to repay their debts.

This is done through the restructuring of their debts and making repayments manageable.

“Whilst it may be difficult for many to confront their financial hardship, consumers who are receiving an income are encouraged to act immediately by considering debt counselling as a debt relief measure and to do so before their assets, such as houses, cars and others, are repossessed by credit providers,” said Legodi.

Debt counselling presents several benefits, including:

• An opportunity to repay debt without borrowing more money or taking on extra debt.
• If you apply before credit providers institute legal action to enforce the debt, you receive protection against such legal action and repossession of your assets.
• If you continue making repayments while under debt counselling, you will still be protected from repossession of your assets until all your debts are paid up.
• A registered debt counsellor negotiates reduced repayments on behalf of the consumer, using the consumer’s existing income.

“Furthermore, the process of debt counselling leads to rehabilitation, as it presents consumers with an opportunity to start afresh and build a clean credit record,” said the NCR.

The credit regulator also reminded consumers that for one to apply for debt counselling, a consumer must have an income and that a consumer cannot go under debt counselling if they are still under debt administration.

In addition, debt counselling is offered by NCR registered debt counsellors, whose registration status can be verified by visiting the NCR website on www.ncr.org.za or by calling 0860 627 627.

The NCR also reminded consumers that debt counselling is not offered for free.

“Debt counselling related costs should be explained to consumers upfront by the debt counsellor and these fees can be confirmed on the NCR website.”

Legodi said consumers should ensure that they receive a comprehensive explanation from the debt counsellor and understand the debt counselling process before they sign and accept the application.

“The NCR was established to ensure compliance with the NCA [National Credit Act], and to receive and investigate complaints. If consumers are unhappy with the service provided by debt counsellors, credit providers, credit bureaus or PDAs [payment distribution agents], they are invited to lodge a complaint with the NCR at complaints@ncr.org.za,” said Legodi.

The NCR is an agency of the Department of Trade, Industry and Competition (dtic).