Professional Debt Counselling Explained

Debt Counselling Explained

If you need debt counselling explained to you in a simple and understandable way, you’re certainly in the right place. In 2007, the National Credit Act came into effect and along with it, a new, improved rehabilitation process for over-indebtedness.

We refer to this process as professional debt counselling or debt review. Debt counselling was designed to protect consumers from predatory or reckless lenders, and to rehabilitate consumers back into the credit market.

Moreover, debt counselling was developed out of a need for a legal method which defended consumer rights specifically. Older processes, such as administration and sequestration, were simply not addressing the rampant issue of consumer over-indebtedness.

These methods were also failing to protect consumers from unscrupulous lenders. Predatory creditors were, and still are, locking consumers into reckless credit agreements, only to demand high-interest payments, which they couldn’t afford to pay. Consequently, these reckless creditors would deduct excessive amounts from their salaries every month, via illegal Emolument Attachment or Garnishee Orders.

A Successful Rehabilitative Method

Debt counselling explained – South Africa decided to implement this process after finding out about its success in the USA, the United Kingdom, and other countries. Since the inception of debt counselling, over R2 billion has been repaid to credit providers, testament to the tremendous success of this rehabilitative method.

The primary purpose of debt counselling is to provide consumers with a dignified, formal route out of over-indebtedness. In this way, they may enjoy a clear credit profile and the responsible, constructive use of credit facilities once again.

 

Under the National Credit Act (NCA), it’s illegal for credit providers to take legal action against you, 60 days after your debt counsellor informs them of you entering debt counselling. Otherwise, if you don’t pay off your debt and receive a letter of demand, your credit providers may then send you a summons ordering you to attend court.  Here, they may attempt to repossess your assets, in order to auction them off and use the subsequent monies to settle your outstanding debts.

In light of this, the protection that debt counselling affords you, your home, your car, your salary and your other valuables is reason enough to enter. Especially, if you can’t keep up with your monthly instalments and have a damaged credit record.

A Relationship Based on Trust

While having debt counselling explained to you, take note that anyone can apply for debt counselling, which firstly entails undergoing an assessment to determine whether you are over-indebted or not. If your debt counsellor discovers that you are over-indebted, they will approach each of your credit providers in person.

Your debt counsellor will then negotiate with your credit providers to have your various credit agreements extended, and your monthly instalments reduced. Credit providers are co-operative with professional debt counsellors.  This because debt counselling is a trusted legal process, which allows both parties to get what they want out of the situation – the eventual settlement of debts owed.

 

Credit providers trust professional, NCR-registered debt counsellors, such as NDA.  If your credit providers enjoy a good relationship with your debt counsellor, they may even agree to reduce your interest rates, as they often do when approached by our debt counsellors.

If you’re looking for a trustworthy, well-established debt counsellor to arrange for your instalments to be reduced, contact NDA immediately. Enter your details into our website contact form for a free call back from a professional consultant now: https://nationaldebtadvisors.co.za/