What is debt counselling (review)?

Debt review, otherwise known as debt counselling, is a debt solution targeted at South African consumers who are over-indebted and struggling to make their debt repayments.

The National Credit Act (NCA) introduced the formal debt rehabilitation process, debt review, in order to prevent consumers from having administration orders placed against them and having to deal with the negative long-term effects.

The process was also implemented in order to make sure that debt counsellors follow strict and ethical guidelines when assisting clients with gaining their financial well-being.

Debt review / debt counselling entails a debt counsellor who assesses a client’s outstanding debt and implements a restructured debt repayment plan. This will be done through the process of renegotiating interest rates with credit providers in order to reduce them, as well as extending the debt repayment terms.

A new affordable monthly budget and payment plan will be drawn up by a debt counsellor, which will provide the client with the correct guidelines and means to live off.

In addition to this, the debt review process requires the client to make only one monthly debt repayment to a payment distribution agency, which will then ensure the monthly payments are distributed to all the client’s credit providers as per the agreed payment plan. This helps reduce the stress of having to keep up to date and on top of multiple debt repayments.

Most importantly, when under debt review, clients are legally protected by the National Credit Act (NCA) and creditors are no longer allowed to harass them or continue with legal proceeding.