FAQ
FAQ
Frequently Asked Questions
debt counselling
What is debt counselling?
Debt counselling is one of the debt relief measures available to south africans and provided for in the National Credit Act. This process is intended to assist over-indebted consumers struggling with debt, through budget advice, negotiation with credit providers for reduced payments and restructuring of debts. It is not a savings mechanism. Do not be fooled by being told that you will save up to 60% of your monthly income.
Is Debt Counselling and Debt Review the same thing?
Yes, the terms are used interchangeably.
Who is eligible to go under debt counselling?
Any consumer experiencing or is likely to experience debt-related problems and is having difficulity making his/her current monthly payments. A consumer who is over-indebted may approach a debt counsellor directly, or may be reffered to a debt counsellor by his/her creditor/s, the magistrate court or the ational Credit Regulator. The consumer must choose his own Debt Counsellor and should also have a distributable income which will be used to offer reduced payments to the credit providers.
Must Debt Counsellors be registered? Where can I check if they are?
Yes, all debt counsellors must be registered ith the National Credit Regulator. You can check on the NCR’s website under Debt Counselling- search for a debt counsellor.
Can I apply for debt counselling whilst under Administration?
No, the administration order must first be rescinded by the agistrates court where it was granted before you can apply for debt counselling.
If a consumer feels like they have been put under debt counselling without their consent, who should they contact?
Consumers should contact the National Credit Regulator to lodge a complaint. The NCR will investigate the matter.
Can I apply for debt counselling without consent from my spouse?
Consumers married in community of property (COP) cannot apply for debt counselling without consent from their spouse; only those married out of community of property can do so. If married in COP, a joint debt counselling application is necessary.
Once under debt counselling, can one simply exit the programme before settling one's debts?
No. You can only exit debt counselling by paying off all your debt obligations and obtaining a clearance certificate. This can be achieved if all your short term debts are settled and if there is a home loan account it has to be up to date in terms of the debt counselling re-arrangement order before a clearance certificate is issued.
How much does debt counselling cost?
There are set fees as per the fee guideline from the National Credit Regulator that consumers should be chatged. Debt counsellors are not allowed to charge above the set fees: https://www.ncr.org.za/documents/debt%20counselling%20fee%20structure%20guideline.pdf
How do I make payments when I am under debt counselling?
A consumer who is under debt counselling can make payments through a registered Payment Distribution Agent (PDA) or make payments directly to credit providers. A consumer may not make any payments, except the R50.00 debt counselling application fee, directly to the Debt Counsellor. Debt Counsellors are prohibited from collecting and distibuting debt counselling funds to credit providers.
What is the role of a Payment Distribution Agent (PDA)?
The role of the PDA is to:
- Recieve and store a Debt Review repayment plan from a registered Debt COunsellor;
- To execute the collection of the debt repayment instalment from the consumer on the agreed date;
- To pay credit providers as instructed in the plan;
- to report on the collections and payments to the consumer;
- To provide the necessary support to consumers, debt counsellors and credit providers.
Once under debt counselling, can a consumer change a debt counsellor if they are unhappy with the current one or if the debt counsellor is not contactable?
Yes, the consumer can change the debt counsellor by looking for a new debt counsellors. The new debt counsellor will take over the file from the previous debt counsellor and continue from where he/she left off. The consumer is not required to pay the new debt counsellor fees which were already paid before to the previous debt counsellor, except for the after-care fees which are due to the new debt counsellor.
If under debt counselling, and a consumer experiences a change in circumstance (e.g. temporary loss of income, salary reduction, retrenchment of partner etc.) can they get assistance from their credit providers regarding the change in their circumstances affecting their current budget?
The debt counsellor must followthe guidelines issued by the National Credit Regulator regarding Change in Circumstances. In the process, the debt counsellor negotiates new or interim terms with the credit providers to allow for the change in circumstances. Please see below link for the guidelines: https://www.ncr.org.za/documents/debt%20counselling%20fee%20structure%20guideline.pdf
FAQ
Frequently Asked Questions
Credit Life insurance
What is credit life insurance?
Credit life insurance is incurance cover taken by consumer taking credit. Credit life insurance insures the consumer’s obligations against the consumer’s death, disablitity, unempployment, or other events that may affect the consumer’s ability to earn and income to service the debt. The insurance may be required by the credit provider as a pre-condition granting credit to the consumer.
When is credit life insurance taken?
It is generally taken at the time when the consumer takes credit. It may also be taken during the life of the credit agreement, normally when the consumer swithces between insurers.
What kind of debts are covered by credit life insurance?
Mortgages, personal loans, credit cards, store cards, instalment sale agreements for vehicles, furniture or appliances.
Are there any exlusions to credit life insurance?
Yes, there are exclusions eliminating coverage for some types of risks. Generally risks resulting from the consumer’s deliberate conduct, or for which the consumer is totally responsible for causing. Examples are exlusions resulting from suicide, alcohol and drugs. The exclusion may also be extraneous risks such as civil commotion, riots, unprotected strikes and self inflicted injury. The consumer is not covered for these risks and the insurer is not liable to pay clams arising from them.
Below are examples of exclusions to credit life insurance – Credit Life Insurance may exclude or limit cover in relation to different covered events in the circumstances set out below (please note that there is a complete list of these exclusions in the Credit Life Regulations):
- Loss of an income resulting from retrenchment within the first three (3) months after the commencement of cover under that credit life cover.
- Lawful dismillal from employment as a result of wilful misconduct
- Resignation
- Retirement
- Participation in an unprotectedstrike.
- Voluntary retrenchment or termination of employment
- Where a consumer is aware or recieved notice of termination of employment during three (3) months preceding the date of which cover under the credit life policy commenced.
If a consumer lost employment while under debt review, is he/she allowed to claim credit life insurance?
Yes, if a consumer had credit life insurance against retrenchment or loss of income whilst in debt review.
Can I claim credit life insurance if I have either momentarily lost my full income or experienced a partial reduction in income during or resulting from Covid-19?
This depends on the terms of your policy. Most policies cover temporary loss of full income. Some policies do not cover partial loss of income whilst others do. It is therefore important to check the terms and conditions of your policy and understand what you are covered for.
Are Consumer Forced to take credit life insurance offered by the credit provider?
No, the consumer can purchase insurance from a different insurer. The credit provider must be nominated as the loss payee in this policy to benefit from it when the insured event occurs.
What is the maximum charges for credit life insurance?
The policy must be kept for the term of the credit agreement. The policy falls away when the agreement terminates.
What is the maximum charger for credit life insurance?
A premium of R2.50 per R1000 for mortgages in general and R2 per R10000 for mortgages for affordable housing. The prmium amount is set at R2 for consumers below 55 years and R2.50 for thos above 55 years. A premium of R4.50 per R1000 of credit for personal loans, credit cards, store cards, overdrafts, vehic;e ;pams amd other loans.
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