Debt Counselling process
If a person cannot pay all his/her instalments timeously and
does not have enough money left over to pay for necessary living expenses,
he/she is most probably over-indebted.
Such a consumer can be referred by the Court or may apply to
a Debt Counsellor to be declared over-indebted. The Debt Counsellor must notify
all credit providers and credit bureaus of the application then evaluate the
consumer’s indebtedness.
If the Debt Counsellor determines that the consumer is
over-indebted, the counsellor may recommend to the Magistrate’s Court that one
or more agreements be declare reckless and/or that the consumers repayments be
rearranged by extending the contract and make the payments smaller. If the
creditors all agree, this procedure can be voluntary, and no court order is
necessary.
A creditor who receives notice of court proceedings for
over-indebtedness or notice from a Debt Counsellor of debt review, MAY NOT
ENFORCE the agreement until a determination by the court or Debt Counsellor has
been made.
A consumer may not make any further debts until all debts
have been paid in full in terms of the rearrangement or the Debt Counsellor or
Court decided that the consumer is not over-indebted.
What is Debt Counselling?
Debt counselling is an intervention mechanism for over
indebted consumers.
A consumer can seek the assistance of a Debt Counsellor on
his/her own accord or can be referred to one by a court or by the National
Credit Regulator.
The main purpose of a
Debt Counsellor is to:
- Act as a mediator between credit providers and indebted consumers. Assess a Consumers state of indebtedness.
- Facilitate debt re-arrangement with Credit Providers.
- Make recommendations to Credit Providers and/or Magistrates Court.
Definition of Debt Counsellor
A Debt Counsellor is anyone who is authorised by legislation
to offer assistance to consumers who have debt-related problems.
Reason
for the NCA
The Credit Act aims to protect consumers and credit
providers with a number of provisions
that will directly affect the manner in which credit is provided.
It is there to clean up the credit market in South Africa by
tackling over-indebtedness and eradicating the reckless granting of credit. The
purpose of the National Credit Act is to protect the consumer by regulating
the country’s credit granting practices so that consumers can benefit
from a credit environment that is transparent, fair and responsible
and at the same time promoting a competitive and sustainable market
Process Flow
