Debt Counselling

Debt Counselling is a process that is intended to help restructure the debt obligations of consumers who cannot pay their debts. A repayment plan that is affordable to the consumer and acceptable to the creditor is developed by a Debt Counsellor and made an order of Court. All monthly debt obligations are consolidated into one monthly instalment.

  • If not already listed, you will be protected from being blacklisted;
  • Credit Providers must communicate with us, not you: “Don’t speak to me, speak to my counsellor!”
  • Repossession of your assets will be prevented where possible – this includes retaining the home and a vehicle where possible;
  • You will pay only one affordable monthly instalment;
  • Debt Counselling provides you, the consumer, with an acceptable standard of living while repaying your debts;
  • Your debts will be reduced to manageable levels;
  • Debt Counselling provides you with an agreed, affordable and realistic monthly budget in order to resolve the situation in the shortest possible time
  • Improved overall financial position.

No. You must be fully committed to becoming debt free.

If you are married in community of property:-

  • the application will affect both you and your partner;
  • both partners’ income, expenses and debt will be considered; and
  • the application for debt review will be a joint application.

If married out of community of property, your partner’s income and contribution to the household expenses will be considered, although the Debt Review process will apply only to you and your debt obligations.

Credit providers will terminate the Debt Review process and may proceed with legal action. For this reason it is important that you are fully committed to the process and to becoming debt free.

No. Your right to confidentiality is protected. Only your credit providers will be notified.

Debt Mediation

Debt mediation is a process that is intended to help consumers who are experiencing a cash flow problem that might only last a few months. An alternative arrangement affordable to the consumer and acceptable to the creditor is made on the consumer’s behalf.

No, it is not advisable. The model used to prepare a repayment plan, is based on a set of pre-agreed “rules”. The application of the rules is complex and a computer program would be required to prepare and table such proposals.
If an unaccredited system is used, credit providers may question the proposal / plan and possibly reject it.

Debt Mediation has been found to be problematic in a number of ways.

Complicated and drawn-out process

One such problem is that credit providers alone can adjust the consumer’s payment plan, which is stored on their company database of client profiles.
This drawn-out, complicated nature of debt mediation, doesn’t allow for a single combined payment plan, as debt review does. In most cases, indebted consumers have a couple of loans. These can include accounts, credit cards, store cards, vehicle finance etc., with a number of different credit providers.
If you want your various monthly instalments and interest rates reduced, your debt mediator needs to negotiate with your credit providers, individually. As you can imagine, this process has the capacity to be quite laborious.

No legal protection

Debt mediation doesn’t involve obtaining a court order. Consequently, if your credit provider threatened to take legal action against you, they would be within their rights. On the other hand, if you were under debt review, credit providers would be barred from doing so.
Under debt mediation, only a few of your instalments may be reduced. As a result, this means that the financial relief would be minimal, as opposed to going under debt review. Especially relevant to note is that debt review restructures your whole credit profile.

Violates the NCA

The National Credit Regulator (NCR) does not approve of debt mediation, as it violates the regulations of the National Credit Act (NCA). Furthermore, debt mediation does not provide consumers with protection against the repossession of their assets or having unlawful garnishee orders attached to their salaries. Under debt review, consumers are protected from this and more.

To find out more about how debt review is a better option, complete our contact form and one of our friendly consultants will give you a call back!

We offer debt mediation services to help consumers who cannot pay their debts, have judgements or have debt obligations that do not qualify for inclusion in Debt Review. READ MORE

Consumer Rights

As a South African consumer you have the right to:-

  • An understandable credit agreement in plain language;
  • A quote and pre-agreement statement, bonding for 5 days;
  • Advertising and marketing which contains all the information on the cost of credit;
  • Limited credit sales whilst you are at work and home;
  • Feedback as to why your credit application was unsuccessful;
  • The prohibition of Reckless Credit;
  • Regulated fees and interest on all credit agreements, including micro and unsecured loans;
  • Regulated Credit Bureaus;
  • One free credit report per year;
  • Assistance when over-indebted;
  • Negotiate with Credit Provider (Debt Mediation);
  • Debt Counselling or Debt Administration, to enable restructuring of your debt.

In terms of the National Credit Act, you have the right to:-

  • request reasons for credit refusal;
  • receive documents in plain and understandable language, and in an official language you understand;
  • having all the relevant documents delivered to you;
  • confidentiality;
  • choose your own insurance;
  • six monthly statements delivered to you;
  • a pre-agreement statement with all the terms and conditions, and a written quote, valid for five days, which you may accept or reject;
  • only be charged fees and charges stipulated in the Act;
  • not be charged more than double of what you owed when you missed your first payment;
  • not pay old debt; and
  • debt counselling services, when you are unable to meet your repayment obligations.

In terms of the Consumer Protection Act, you have the following rights:

  • The right to equality;
  • The right to privacy;
  • The right to choose;
  • The right to disclosure of information;
  • The right to fair and responsible marketing;
  • The right to fair and honest dealings;
  • The right to fair, just and reasonable terms and conditions;
  • The right to fair value, good quality – including quality service – and safety;
  • Right to accountability from suppliers.
  • You have the right to be informed that the credit provider intends to report negative information on you to a credit bureau before the credit provider actually submits the information;
  • You have the right to receive a copy of your credit record from a credit bureau when you request it;-
    • One free copy per year
    • Any further records you require, but these may be charged for.
  • You have the right to query or challenge any information kept by the credit bureau if you do not agree with the information;
    • You have the right for your information to be kept confidential; and
    • For your information to be used only for purposes allowed by the National Credit Act.

Before a credit provider may repossess your possessions, the Credit provider must first:-

  • seek the necessary permission from court;
  • give you notice prior to repossession; and
  • give you notice in writing, informing you of your available options.
    Your options are:-

    1. To seek help from a debt counsellor;
    2. To seek help from an alternative dispute mechanism; or
    3. To bring your payments up-to-date.
  • You have the right to reinstate the agreement by paying all overdue amounts, including default charges and reasonable costs of enforcing the agreement, before the credit provider cancels the agreement.
    Yes, interest may be charged, as long as it is in line with the provisions made in the National Credit Act. The Credit provider must also inform you upfront, usually this is stipulated in your loan agreement.

Interest

No. As a South African consumer, you have the right to regulated fees and interest on all credit agreements.

The National Credit Act regulates interest rates, initiation fees and service fees by:-

  • specifying maximum interest rates that credit providers may charge you;
  • specifying the maximum initiation fee that credit providers may charge you; and
  • specifying the maximum fees that credit providers are allowed to charge and how often the fees can be recovered.
Type of credit agreement Maximum Interest Rate
Mortgages/ Bonds agreements REPO Rate + 12%
Credit facilities

(Credit cards, Store cards etc)

 REPO Rate + 14%
Unsecured credit facilities

(eg: Personal loans)

 REPO Rate + 21%
Incidental credit arrangement

(Overdue bills from doctors, eskom, muncipalities etc)

 2% per month
Small & medium business loans REPO Rate + 27%
Low income housing loans REPO Rate + 27%
Short term loans 5% per month
Any other type of loans not covered above REPO Rate + 17%

Yes, interest may be charged, as long as it is in line with the provisions of the National Credit Act. The Credit provider must also inform you upfront – usually this is stipulated in your loan agreement.

The National Credit Act specifies the maximum interest rates that credit providers may charge you and prohibits penalty fees when you cancel a contract, although a cancellation fee may apply.

Should credit providers not comply with the provisions relating to maximum rates and fees stipulated in the Act, a Tribunal may declare the agreement null and void and all payments made by you will have to be refunded, together with prescribed interest.

No. The National Credit Act stipulates that once you are in default, the sum of the following may never exceed the outstanding capital balance owed at the time of default:-

  • service fees;
  • interest;
  • cost of credit insurance;
  • default administration charges; and collection costs

In other words, credit providers have to write off the balance or refund you when:-

  • the sum of interest, fees, charges and costs > outstanding debt at time of default;