Debt counseling was introduced by the National Credit Act in 2007. Since then, a lot of consumers have applied for debt counseling. It is designed to provide over-indebted consumer with an alternative to the traditional remedies for defaulting on your debt administration and sequestration.
Debt in South Africa has accumulated to a staggering R1.36 Trillion. Although the figure is a collection of business and personal debt, the amount is certainly increasing as the need to borrow money increase. However with a need to borrow comes the responsibility to pay back a reality that many are unable to do. It is for this reason that debt counseling services are in such high demand in South Africa.
Anyone can apply for debt counseling, but not everyone will qualify. To qualify for debt counseling, you need to be over-indebted as defined by the NCA- that is, you are unable to meet all your financial obligation in a timely manner. If you are not over-indebted, you cannot be placed in debt counseling. In that case you must issue with a letter of rejection, spelling out the reason for the debt counsellor’s finding.
A debt counsellor helps over-indebted consumers to become debt-free and credit-healthy by way of the regulated debt counseling process. A debt counselor must be a natural person – in other words, a company cannot be a debt counselor – qualified by and registered with the National Credit Regulator. In terms of the National Credit Act, a debt counsellor may not work for a credit provider, debt collection agency or credit bureau.. A debt counsellor is not a financial adviser and hence is limited to dealing with over-indebtedness and the restructuring of your debts.