What is Debt Counselling?

Debt counselling is a highly effective financial recovery process. It has been designed to assist South Africans who are struggling to make regular debt payments. Formally introduced by the National Credit Act (NCA) in 2007, this closely regulated debt solution provides the expert advice, education, and legal protection you need to manage and overcome your debt.

Also known as debt review, the process will teach you how to budget effectively while proactively reducing your monthly expenses. The goal is to help you comfortably pay off what you owe, in order to achieve long-term financial stability.

Our tailored debt relief process helps you by negotiating lower monthly installments and reduced interest rates directly with your credit providers. This ensures you can confidently settle your accounts while only paying what you can realistically afford.

The process typically involves several key steps:

1. Assessment: A debt counsellor (DC) assesses your financial situation to determine if you are over-indebted and eligible for the debt counselling process.
2. Notification: The DC notifies your creditors and the credit bureaus that you have formally applied for debt review by sending out a Form 17.1. This alerts them to a temporary legal stay that protects you from new legal actions and asset repossession while your assessment is finalized.
3. Budgeting: You work with the debt counsellor to create a budget that ensures your basic needs are met while setting aside funds for debt repayment.
4. Negotiation: The DC negotiates with your creditors to lower interest rates and extend repayment terms, consolidating your debts into a single, reduced monthly payment. This payment plan is later made an order of the court.
5. Repayment Plan: You make regular payments to a Payment Distribution Agency (PDA), which then distributes the funds to your creditors.
6. Completion: Once all short-term debts are paid off, you will receive a clearance certificate (Form 19). This certificate mandates credit bureaus to remove the debt review status from your profile.

• Consolidated Payments: The debt counselling process will combine all of your debt instalments into one easy, consolidated payment.
• Asset Protection: The process prevents the repossession of assets like your home and car.
• Creditor Negotiations: The DC will handle all communication and negotiations with your creditors. 
•  Financial Protection: You won't be able to take on new credit while undergoing the process. This is to prevent further debt accumulation.

• Eligibility: Not everyone qualifies for this debt management process. Your unique circumstances will have to be assessed to see if you qualify. If you do not qualify, we will suggest alternative options.
• Potential for Scams: It’s important to work with a legitimate, NCR-registered debt counsellor to avoid scams. You can always ask the National Credit Regulator (NCR) if a company is registered.
• Associated Costs: There are fees involved in debt counselling, but they will not compromise your living expenses as these fees are worked in to your new repayment plan.
• Limited Coverage: Debt counselling may not include all debts, especially if legal action has already been initiated by creditors.

• When selecting a debt counsellor, make sure that they are NCR registered and have a transparent fee structure. A reputable DC will provide a full disclosure of their fees upfront and explain the entire process before you commit. As a fully registered firm, SDC operates under NCR Registration Number: NCRDC3360. Do your research, ask a lot of questions, and if the company is reluctant to answer your questions, go to someone else.

  It is also advisable to ask if the company is registered with the Debt Counsellors Association Of South Africa (DCASA). This will just give you a bit more reassurance that you will get the service you deserve.

Debt counselling can be a valuable service for those overwhelmed by debt. It offers a structured approach to debt repayment and financial education. However, it’s crucial to understand both the benefits and limitations before entering the process. Working with a reputable and registered debt counsellor is essential to ensure that you receive the support you need to navigate your way out of debt.

Who qualifies for debt counselling in South Africa?

To qualify, you must be a natural person (not a business) with a steady, verifiable source of income that is no longer sufficient to meet your monthly credit obligations. A registered debt counsellor will perform an official assessment to formally declare you over-indebted under the National Credit Act.

Can I apply for debt counselling without my spouse?

If you are married Out of Community of Property (with or without the accrual system), you can apply individually. However, if you are married In Community of Property (COP), South African law views your estate as joint, meaning you and your spouse must submit a joint application.

Will I lose my car or home if I go under debt review?

No, quite the opposite. Entering debt counselling provides immediate legal protection under the National Credit Act, which stops credit providers from repossessing your assets or executing legal actions, provided your restructured payment plan is consistently maintained via an accredited Payment Distribution Agency (PDA).

Can I still apply for credit while undergoing debt counselling?

No. While you are under debt review, a temporary flag is placed on your profile at all major credit bureaus to protect you from taking on further financial strain. Credit providers are legally prohibited from granting you new loans or cards until you successfully complete the process.

How long does the debt counselling process take to complete?

The timeline depends entirely on the total amount of debt you owe and how much you can realistically afford to pay back each month. On average, most consumers successfully complete the program and clear their credit records within 3 to 5 years.