Are your debts ruining your life?You are not alone, a debt counsellor could help!Jenny Grice

Prices are sky-rocketing but wages are staying the same. More and more people are finding it hard to pay their debts at the end of the month.Sometimes the simplest solution seems to be to get another loan, but this is not so easy now – the new National Credit Act (NCA) has made it more difficult to get loans if you already have other debts that you cannot honour.

Visiting a debt counsellor could help you. These are experts accredited by the National Credit Regulator (NCR) who assist people who are over-indebted. If you have defaulted on your instalments, the person that you owe (the creditor) must refer you to a debt counsellor before they can take legal action.

If you refuse to go to a debt counsellor, then your creditor can immediately take legal action against you.If you agree to go to the debt counsellor, then the debt counsellor will inform your creditor(s) that you are under debt counselling.

Your creditor(s) will not be able to take legal action against you for 60 business days from the date when you applied or until your application for debt counselling has been rejected by the debt counsellor.

You can also voluntarily visit a debt counsellor if you find that your repayments are becoming too much and you need some advice.

Be open and honestDebt counsellor Madoda Siqaza says that it is important when you visit a debt counsellor to be completely honest about all the income and the debts that you have. If you are not open it will be difficult for the counsellor to advise you and to restructure your payments.

The counsellor will also need to see payslips, instalment agreements and so on.Before restructuring your payments, counsellors will scrutinise all your monthly payments. And if you are married, "we have to know how much the husband and wife are earning and the total expenditure of the household," says Siqaza.

"The position of one spouse affects the other. If the husband has too much debt, we try to counsel them both."Debt counsellors can also check whether there are any irregularities in how instalment agreements have been signed. They will question whether you need all the items that you are currently paying for.

Where to find a debt counsellor?Contact the National Credit Regulator on 0860 627 627. Or visit their website on or e-mail or

Belt-tightening"There has to be an element of belt-tightening for people to be assisted!" says Siqaza. "Often we find that people are loaded with policies. You find that one person married with two children has six policies – all of them funeral cover.

When we ask them why, they say, 'the Insurance agent said I should take them'."Siqaza encourages people to visit debt counsellors who are also independent financial advisers.

They can advise you on what other financial products are available – there are more options out there than just insurance policies and funeral cover! Siqaza also urges people to look long and hard at themselves.

"Some people tend to define their personalities by what they have," says Siqaza. "They see things like expensive cars and clothes as an extension of their personality.

But if you see a person driving an expensive car – ask yourself, does that person have a car or own the car? I can buy the car for R120 000 but my debt is R119 000.
So my own ownership is only R1000. I can’t claim that I am wealthy, very soon I will own something negative because the value of a car depreciates so quickly. People must sit down and look at what they have and what they own. Many are living in fool's paradise!"

Tips on how to be money wise!

* Never sign a blank form.

* If you have cards from retail outlets and you are a club member and receive a magazine – cancel your club membership. You will still have your card but they won't send you the magazine. You could save R20 to R30 a month.

* Draw up a budget of your monthly expenses and income including savings.* Learn to say "NO!" when you are offered credit. * If you do need to take a loan, compare interest rates and costs from different credit providers.

Steps in debt counselling

Step 1: Consumer applies for debt reviewStep 2: Debt counsellor (DC) informs credit providers and credit bureaux of the application within 5 days of receiving the applicationStep 3: DC assesses the debtsStep 4: DC either accepts the application or rejects itStep 5: If application is rejected, DC will inform all credit providers and credit bureauxStep 6: If application is accepted, DC will restructure the debts and make a proposal to creditorsStep 7: If all creditors agree to the proposal, DC will prepare a consent orderStep 8: If one or more of the creditors do not accept the DC's proposal, the DC will approach the magistrate court and recommend that a court order be issuedStep 9: Once an order is granted, the consumer will then pay the new negotiated instalments until all the debts have been paid upStep 10: Once all the debts have been paid up, the DC will issue a clearance certificate and inform the credit bureaux to de-list the consumer's information from the bureaux records.(information from National Credit Regulator)

How much do debt counsellors charge?

Application fee R50Restructuring fee * The first instalment due to creditors goes to the debt counsellor (DC) up to a maximum of R3000 + VAT.

* You then pay a monthly fee to the DC of 5% on every instalment for the first 2 years and 2% from the third year.

(If you earn less than R2500 per month or have a household income of less than R3500 per month then you will not pay the restructuring fee – the NCR will pay. But you will pay the monthly fee.)


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