The Program
How the Debt Counselling Program Works
Debt counselling is a structured, government-regulated process designed to help over-indebted South Africans regain financial stability. When your monthly debt repayments exceed what is affordable after covering essential living expenses, you may qualify for debt counselling. This program provides a clear, legally protected pathway to reduce monthly instalments and prevent further financial strain.
Debt counselling does not cancel your debt. Instead, it restructures your repayments so that you can pay a reduced amount each month using your available disposable income.
To apply for the program, you must be employed and earning a stable monthly income. Accurate financial disclosure during the application stage is essential, as it directly affects the outcome and viability of your repayment plan. If you are married in community of property, both partners must apply together.
The program is fully regulated by the National Credit Regulator (NCR) and supported by the South African Government through the National Credit Act 34 of 2005 and the National Credit Amendment Act 19 of 2014. These laws ensure that over-indebted consumers are protected and given access to safe, legal debt relief through the debt review process.
Who Qualifies as Over Indebted
You may be considered over indebted if your monthly debt repayments exceed what remains after deducting essential living expenses from your net income. When consumers reach this point, they often take out additional loans simply to cover existing debt. This creates a cycle of arrears, increasing interest charges, legal fees, and possible handovers to attorneys or collectors.
Debt counselling interrupts this cycle by providing a regulated plan that focuses on affordability and legal protection.
The Full Program
Below is a step-by-step overview of how the debt counselling program works from start to finish.
Consumer Makes an Enquiry
You contact our NCR registered debt counsellor, who explains the process and gathers initial information. A free credit report is provided to help you understand your current financial position.
Completion of the Application (Form 16.1)
You complete Form 16.1, which captures your income, expenses, debts, and budget requirements. A consent form is included so that we can obtain your credit bureau report.
Credit Providers Are Notified of Your Application
After reviewing your affordability, the debt counsellor notifies your credit providers that you have applied for debt review. This begins the formal process.
Credit Providers Supply Account Balances
Your creditors provide certified balances, including outstanding amounts, interest rates, credit life premiums where applicable, and the remaining repayment term.
Affordability Assessment
Your debt counsellor performs a full assessment of your living expenses, income, and obligations to determine what you can realistically afford to pay each month.
Over Indebtedness Assessment
Using industry expertise and statutory guidelines, your debt counsellor determines whether you are over indebted. Credit providers are informed of the outcome. You are flagged at the credit bureau as being under debt review, and no new credit may be granted during this period.
Initial Payment Proposal Sent to PDA and Creditors
A detailed proposal is sent to the Payment Distribution Agency and your creditors. This outlines your budget and the reduced repayment premium based on affordability.
Credit Providers Accept or Reject the Proposal
Creditors review the proposal and may accept, reject, or submit a counter-offer. Negotiations continue until a workable agreement is reached.
Final Payment Proposal and Court Application
Once all acceptances are secured, your file is submitted to an attorney who applies for a consent order at court. When the court order is granted, all accounts are formally restructured according to the approved repayment plan.
Monthly Debt Repayments
You pay one agreed monthly instalment to an NCR approved Payment Distribution Agency. The PDA distributes the funds to your creditors. You receive a monthly distribution statement for full transparency.
Clearance Certificate Issued
When all your debts under review are paid up, your debt counsellor requests paid-up letters from creditors and issues your clearance certificate. The credit bureaus are notified and the debt review status is removed from your profile.
Becoming a Debt Free Consumer
After receiving your clearance certificate and completing the process, you are officially debt free. Your credit report is updated, and you can move forward with confidence, stability, and a strong financial foundation.