Being over-indebted can be quite stressful. Without the right knowledge, you can find it difficult to get out of such a situation. Fortunately, there are various ways that can be used to get out of debt. Sometimes all it takes is a good debt management plan. The amended National Credit Act (2007) included state-mandated debt counselling, giving consumers a second chance.
Here’s what else you need to know about debt counselling:
You may not qualify
Not everyone is eligible for debt counselling. To qualify, you need to be classified as over-indebted under NCA terms.
There are costs involved
The application process is not free. Fees are laid out in the official NCR guidelines. Application and rejection fees do apply, as well as a counsellor’s fee, follow-up and after-care fees. Counsellor’s fees will never exceed R6000.
Not all debts are included
Applying for debt counselling does not mean that all debts are included in the review process. If you have debts for which legal action has already been launched, counsellors won’t be able to help you. Debt counsellors can only help you with debts that can still be managed.
Protection from creditors isn’t guaranteed
Debt counselling can only protect you to a certain extent. Creditors are able to withdraw after 60 days, by issuing a notice to the borrower, the debt counsellor and the NCR.
Protection against further indebtedness
Debt counselling has an “in duplum” law which benefits consumers. The accrued interest has a limit once this amount has reached a level equal to the amount originally owed. This limit placed on the amount of interest a creditor can charge on an account, helps you avoid becoming further indebted.
No option to access more credit
You can only obtain credit after you receive a debt clearance certificate from your counsellor.
Debt counsellors offer different services
You need to search thoroughly to find a good debt counsellor. Competency, education and qualification levels differ significantly.
You don’t automatically get out of debt
As a consumer, you are responsible for paying off your debts. You can’t shift responsibility to the debt counsellor.