Debt Review – How it works – Part 1

You may be wondering what is a debt review or what is the function of a Debt Counsellor? Well, here’s a brief explanation:

Recently a new Act was made into law called the National Credit Act (the NCA).

In the NCA (which talks all about credit and credit accounts) there is a section (Section 86) which deals with what to do if a consumer has too many debts, too many obligations and not enough money to pay for everything. This section specifically mentions something called debt counselling. Debt Counselling would be advice about your debt from a qualified debt counsellor. A Debt Counsellor would be registered with the National Credit regulator (who is an industry watch dog’s of sorts.)

The NCR:

Their job is not to make the industry work (they regulate, not control) but rather to try stop naughty creditors (and recently some Debt Counsellors who do not play by the rules) from being too naughty.

They send a lot of sternly worded letters, visit and of course, keep stats about the industry.

They also register Creditors and Debt Counsellors who offer debt review services.

Debt Review:

A Debt Counsellor will, normally, meet with a troubled consumer and go through their financials with them. They like to get you to fill in a form called a Form 16 which sums up your debt situation. Most prefer to have you do this in advance.

(in some cases the consumer may not be able to go to the Debt Counsellor so they might work with one another via the internet, email or over the phone.)

The Debt Counsellor will want to get as much info from the consumer as possible about what debts they have etc. (so take your statements with you). Most Debt Counsellors will help give you advice for free (though by law they can charge you R50 for coming to visit them). They should (under the Consumer Protection Act) ask you to sign a contract which explains what they will and won’t do if you want to enter debt review. If they don’t feel free to ask for one. This is something different from the form 16 but some clever Debt counsellors are combining the two to save time.

Take the first step towards financial freedom by contacting our supportive debt counsellors at Zero Debt. Whether you have questions about debt review or need personalised advice, our team is here to help. Call us directly at 086 111 3749 or visit our contact page to get in touch. If you’re short on time, simply request a Free Call Back, and one of our qualified counsellors will reach out to you. With Zero Debt, you’re not alone—our certified Debt Counselling company is dedicated to guiding you through the process and helping you regain control of your financial future. Contact us today! Zero Debt is a certified Debt Counselling company.

FAQs and Answers

1. What is the purpose of debt counselling?
   Debt counselling helps over-indebted consumers by providing professional advice and structured debt solutions through a certified debt counsellor.

2. What is a Form 16 in the debt review process?
   Form 16 is a document consumers complete to summarise their financial situation, including income, expenses, and debts, to initiate debt review.

3. Who regulates debt counsellors in South Africa?
   Debt counsellors are registered and regulated by the National Credit Regulator (NCR), which ensures compliance with credit industry standards.

4. Is it necessary to meet a debt counsellor in person?
   No, consumers may communicate with a debt counsellor via email, phone, or online platforms if they cannot attend in person.

5. What information should I provide to the debt counsellor?
   You should provide all debt-related documents, including recent statements and proof of income, to allow for accurate financial assessment.

6. Are there any upfront fees for debt review consultations?
   Most debt counsellors offer free advice, though they are legally allowed to charge a consultation fee of R50 for an in-person meeting.

7. Is a service contract required during debt review?
   Yes, under the Consumer Protection Act, a contract outlining the debt counsellor’s services and obligations should be signed at the outset.

8. What is the role of the National Credit Act in debt review?
   The National Credit Act governs debt counselling and provides protection for over-indebted consumers through structured debt rehabilitation.