Debt Counselling Guide

If you suspect that you are over-indebted or find that your expenses exceed your income, you can apply to a debt counsellor for debt counselling.

An assessment will be done of you financial situation, Form 16 Application.  If it is concluded that you are in fact over-indebted, the credit providers are required to sent information regarding you accounts including outstanding balances, interest rates and the monthly repayment.  Once all this information is at hand a repayment plan will be drawn up.

The amount available to your credit providers, as well as the list of creditors included will give you details of the amount you have to pay, where to pay the amount and on which date.

In terms of the National Credit Act, creditors may not charge you further interest once the interest and other charges on your debt reach the same level as the outstanding capital amount, regardless of any repayment you make.

If you and your creditors agree to the repayment plan, the Debt Counsellor will present the plan to the National Consumer Tribunal for approval.  If any of your creditors disagrees with the plan, the counsellor has to refer the matter to the magistrate’s court that has jurisdiction over the area in which you live for an order to restructure your debts.  The magistrate will make a ruling after hearing representations from all parties:

A. Declare one or more of the credit agreements to be reckless and suspend them and/or re-arrange the remaining repayments;

B. Reject you application; or

C. Order that a revised repayment plan be drawn up.

In order for a credit agreement to be declared reckless, you must be able to prove that you could not afford the credit at the time it was granted and that the  credit provider did not take reasonable steps to determine your financial situation or did not check your affordability before granting you the credit.

If you are undergoing debt counselling, it is noted on your credit record and you will not be able to access further credit.