Debt Councelling - Consumer protection under the National Credit Act

Did you know that nobody could repossess your car, house or assets whilst you are receiving debt counselling?

Debt counsellors are registered under section 44 of the National Credit Act 34 of 2005. Debt counselling is an intervention for over-indebted consumers. Over-indebted consumers may apply for debt review with a debt counsellor or a consumer may be referred to a debt counsellor by the court or the National Credit Act. The main purpose or debt counselling is:

• To assess a consumer's state of indebtedness
• To facilitate debt re-arrangement with credit providers
• To make recommendations to credit providers and Magistrate’s Courts on behalf of over-indebted consumers

A consumer will pay a nominal fee of R50 to the debt counsellor when applying for counselling assessment. If the debt counsellor finds that the borrower is not over-indebted, a letter of rejection will be given to the borrower, and the credit providers will be allowed to continue with the legal proceedings.

If the debt counsellor declares the borrower over-indebted, then:

• The debt counsellor can make a proposal to all credit providers on how the debt can be reconstructed.
• In cases where the credit providers are not prepared to agree to the debt counsellor's proposal on how the debt should be restructured, the debt will be restructured via the court.
• If the credit agreement is declared reckless, certain obligations by the borrower may be terminated or suspended by the court.
  

Remember that debt counselling does not only protect a consumer’s assets but also his/her credit record!

For more information about debt counselling visit Christo Pretorius from Debt Restructuring Services at 17 Rink Street in Port Elizabeth or give him a call at 082 639 6556.