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Make use of debt counselling services, NCR urges

Sep 12, 2018
Make use of debt counselling services, NCR urges

As South Africans adjust to living in a country in the midst of a technical recession, the National Credit Regulator (NCR) has urged the public to make use of debt counselling services.

“At times and for many reasons such as recession, change in circumstances and others, consumers find themselves in a debt trap and no longer able to pay their monthly debt repayments. Consumers who are in this situation should not hide, feel despondent or despair.

“There is a debt relief measure in terms of the National Credit Act (NCA), which could provide relief,” said the Credit Regulator.

The NCR, which was established under the National Credit Act, is responsible for the regulation of the South African credit industry. It called on South Africans to make use of its registered debt counsellors.

Through debt counselling, consumers can be assisted by getting advice on how to budget and a debt counsellor will negotiate with credit providers on behalf of the consumer for reduced payments and ultimately restructure their debts.

“If your income is not enough to pay for all your living expenses and all of your debts, chances are that you could be over-indebted,” said the manager for debt Counselling at the NCR, Kedilatile Legodi, on Tuesday.

The regulator, which is an agency of the Department of Trade and Industry (dti), said there are several signs that point to an individual being over-indebted.

These include:

  • A consumer who cannot repay his/her debts on time as agreed with credit providers;
  • Taking out loans in order repay other loans;
  • Using a credit card and / or overdraft facility to pay debts, buy food and other necessities;
  • Skipping payments on some accounts in order to pay others;
  • Starting to receive letters of demand and summonses from credit providers and/or lawyers; and
  • Having judgments granted against them. 

“These are the signs that should immediately prompt one to seek assistance before it is too late. If you are experiencing any of the above signs, you should speak to your credit providers and negotiate for lower monthly repayments. However, if this process does not work, you can approach an NCR registered debt counsellor for assistance,” advised Legodi.

The debt counselling process

In order to undergo debt counselling, a consumer must be employed and have an income, which will be used to offer reduced payments to credit providers.

Legodi drew consumers’ attention to several things to note if they are considering debt counselling.

These are:

  • Only make use of NCR registered debt counsellors. Upon registration, the NCR issues the debt counsellor a registration certificate and a window decal (green sticker) as a means of identification to consumers. If they are not visible, please request them from the debt counsellor;
  • Understand the debt counselling process, your rights and obligations prior to applying for debt counselling;
  • If you are married in community of property, you must jointly apply for debt counselling with your partner;
  • All debt counselling applications must be reduced to either a court or consent order;
  • Debt counselling service is not free of charge – visit the NCR website for a fee guideline on www.ncr.org.za and request a written disclosure of applicable fees prior to applying for debt counselling;
  • You have a right to request for, and be provided with reasons if your application for debt counselling is rejected;
  • Do not give/pay the debt counsellor money to pay your credit providers. You can either pay your credit providers directly or use a Payment Distribution Agent (PDA) that is registered with the NCR. There are currently only four NCR registered PDAs whose details can be found at www.ncr.org.za or by calling the NCR on 011 554 2600;
  • If you experience any challenges under debt counselling, your debt counsellor is your first point of contact. Make use of your debt counsellor and always ensure that you are kept in the loop on the progress of your application;
  • If your debt counsellor is un-contactable, please contact the NCR immediately for assistance. 

Responsible consumer behaviour 

Legodi urged consumers to remain responsible for their finances when they are under debt counselling.

“They should ensure a full and correct financial disclosure at the time of application; make monthly repayments as agreed on the restructuring plan; follow up on monthly payments made to the PDAs and also ensure that they understand the process, applicable fees and implications.”

Legodi stressed that debt counselling does not cancel one’s debt but helps an individual make reduced payments using their disposable income.

“Remember, it is debt counselling and not debt cancelling. Therefore, you are still liable to pay your debts when under debt counselling,” said Legodi.

South Africa’s gross domestic product (GDP) figures for the second quarter of 2018 showed that the economy slipped into recession.

According to data released by Statistics South Africa (Stats SA), the economy shrunk by 0.7% quarter-on-quarter following a revised 2.6% contraction in the first quarter of 2018.

The widely recognised indicator of recession is two (or more) consecutive quarters of negative growth. - SAnews.gov.za