FAQ
Frequently Asked Questions
Debt Counselling and Debt Review
What is debt counselling?
Debt counselling is a formal debt relief solution provided for in the National Credit Act. It is designed to help over indebted South Africans who are struggling to meet their monthly debt obligations. Through this regulated process, a registered debt counsellor provides budgeting guidance, negotiates reduced instalments with credit providers, and restructures debt into a more affordable repayment plan.
Debt counselling is not a savings scheme. Consumers should be cautious of claims that they will save a large percentage of their income. The goal of debt counselling is affordability, financial stability, and long term protection.
Is debt counselling the same as debt review?
Yes. The terms debt counselling and debt review refer to the same legal process.
Who qualifies for debt counselling?
Any consumer who is over indebted or likely to become over indebted may apply for debt counselling. This includes individuals who are struggling to meet monthly payments or who expect their financial situation to worsen.
A consumer may approach a debt counsellor directly or be referred by a creditor, the magistrates court, or the National Credit Regulator. To qualify, the consumer must have a stable income that can be used to offer reduced payments to credit providers.
The choice of debt counsellor always rests with the consumer.
Must debt counsellors be registered?
Yes. All debt counsellors must be registered with the National Credit Regulator (NCR).
You can verify the registration of any debt counsellor on the NCR website under the Debt Counselling section.
Can I apply for debt counselling while under Administration?
No. An administration order must first be rescinded by the magistrates court that granted it before you can apply for debt counselling.
What if I was placed under debt counselling without my consent?
If you believe you were placed under debt review without your consent, you should lodge a complaint with the National Credit Regulator. The NCR will investigate the matter and provide guidance on next steps.
Can I apply for debt counselling without my spouse’s consent?
If you are married in community of property, both partners must apply together.
If you are married out of community of property, you may apply individually without the consent of your spouse.
Can I exit debt counselling before all my debts are paid?
No. You can only exit debt counselling once all debts under review have been paid and a clearance certificate has been issued. For consumers with a home loan, the bond must be up to date in terms of the court ordered arrangement before a clearance certificate can be issued.
How much does debt counselling cost?
Debt counselling fees are regulated by the National Credit Regulator and cannot exceed the official fee guidelines.
You can review the current NCR fee structure here:
https://www.ncr.org.za/documents/debt%20counselling%20fee%20structure%20guideline.pdf
How do I make payments under debt counselling?
Consumers under debt counselling make payments through a registered Payment Distribution Agency (PDA).
A consumer may not make payments directly to their debt counsellor, except for the initial R50 application fee. Debt counsellors are prohibited from collecting debt repayments.
Consumers may pay creditors directly only if specifically arranged, but most consumers prefer the convenience and security of a PDA.
What is the role of a Payment Distribution Agency (PDA)?
A PDA is responsible for:
• Receiving the debt review repayment plan from the debt counsellor
• Collecting the monthly instalment from the consumer
• Distributing payments to credit providers
• Providing monthly statements to consumers
• Assisting consumers, counsellors, and credit providers with payment-related queries
Can I change my debt counsellor during the process?
Yes. A consumer may change to a new debt counsellor if they feel unsupported or unable to reach their current counsellor.
The new debt counsellor will take over the file and continue the process. You will not be charged the original fees again, but ongoing after care fees will apply.
What if my financial situation changes while under debt review?
If your income decreases or your circumstances change, your debt counsellor can renegotiate new or interim repayment terms with your credit providers. This follows the NCR’s official guidelines for Change in Circumstances.
Guidelines available here:
https://www.ncr.org.za/documents/debt%20counselling%20fee%20structure%20guideline.pdf
Where can I learn more about debt counselling?
You may download the NCR’s official Debt Counselling Brochure or visit the National Credit Regulator’s website at www.ncr.org.za for further information.
Credit Life Insurance
What is credit life insurance?
Credit life insurance is a policy taken out on a credit agreement. It provides financial protection if the consumer becomes unable to earn an income due to death, disability, retrenchment, or other covered events. Some credit providers require this insurance before granting credit.
When is credit life insurance taken out?
It is usually taken at the time a credit agreement is signed, but can also be added at a later stage, for example when switching insurers.
Which debts are covered by credit life insurance?
Credit life insurance may cover:
• Home loans
• Personal loans
• Vehicle finance
• Store cards
• Credit cards
• Overdrafts
• Furniture or appliance accounts
Are there exclusions in credit life insurance policies?
Yes. Policies exclude certain risks, such as those caused by:
• Deliberate or irresponsible conduct
• Suicide
• Alcohol or drug related incidents
• Civil unrest or riots
• Unprotected strikes
• Self-inflicted injury
Exclusions vary by policy and insurer.
Additional common exclusions include:
• Retrenchment occurring within the first 3 months of the policy
• Wilful misconduct
• Resignation
• Voluntary retrenchment
• Termination of employment that was known in advance
Refer to the Credit Life Regulations for the full list of exclusions.
Can I claim credit life insurance while under debt review?
Yes. If you had valid credit life insurance at the time of losing income, retrenchment, disability, or death, you may claim even while under debt review.
Can I claim if I lost income due to Covid-19 or similar events?
This depends on the terms of your policy. Many policies cover temporary full loss of income, while some do not cover partial income reductions. It is important to review your policy wording to understand what is included.
Am I required to take the credit life insurance offered by the credit provider?
No. Consumers may choose to purchase credit life insurance from any insurer. The credit provider must simply be listed as the beneficiary or loss payee.
What are the maximum premiums for credit life insurance?
According to the Credit Life Regulations:
• R2.50 per R1 000 for mortgages
• R2.00 per R1 000 for affordable housing mortgages
• R4.50 per R1 000 for personal loans, credit cards, overdrafts, store cards, and most other credit agreements
• Premiums may vary depending on the consumer’s age
Where can I find more information on credit life insurance?
Visit the National Credit Regulator’s website at www.ncr.org.za for full details.
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