Have you considered debt counselling?

At times consumers may find themselves in a debt trap and are no longer able to pay their monthly debt repayments.

Consumers who are in this situation should not hide away or feel despondent as there is a debt-relief measure in terms of the National Credit Act (NCA) which can provide relief. This debt-relief measure is called debt counselling, which is offered by the National Credit Regulator's (NCR) registered debt counsellors, explained Kedilatile Legodi, Manager: Debt Counselling at the NCR.

Through debt counselling, consumers are given advice on how to budget. A debt counsellor will also negotiate with credit providers, on behalf of the consumer, for reduced payments and ultimately restructure their debts.

“If your income is not enough to pay for all of your living expenses and all of your debt the chances are that you could be over indebted ,” added Legodi.

Signs that a consumer is overindebted include:

■ Being unable to repay debts on time, as agreed with credit providers.

■ Taking out loans to repay other loans.

■ Using a credit card and/or overdraft facility to pay debt and buy food and other necessities.

■ Skipping payments on some accounts in order to pay others.

■ Receiving letters of demand and summonses from credit providers.

“These are the signs that should immediately prompt one to seek assistance before it is too late,” advised Legodi.

“You should speak to your credit providers and negotiate lower monthly repayments. However, if this process is unsuccessful, you can approach an NCR-registered debt counsellor for assistance.”

To undergo debt counselling, a consumer must be employed and have an income which will be used to offer reduced payments to credit providers.

Important factors to note when considering debt counselling include:

■ Only make use of NCR-registered debt counsellors. Upon registration, the NCR issues the debt counsellor a registration certificate and a window decal (green sticker) as a means of identification to consumers. If these are not visible, request them from the debt counsellor.

■ Understand the debt counselling process, your rights and obligations prior to applying for debt counselling.

■ If you are married in community of property, you must jointly apply for debt counselling with your partner.

■ The debt counselling service is not free of charge. Visit the NCR website (www.ncr.org.za) for a fee guideline and request a written disclosure of applicable fees prior to applying for debt counselling.

■ You have a right to request for, and to be provided with, reasons if your application for debt counselling is rejected.

■ Do not give/pay the debt counsellor money to pay your credit providers.You can either pay your credit providers directly or use a Payment Distribution Agent (PDA) that is registered with the NCR. There are currently only four NCR-registered PDAs whose details can be found at www.ncr.org.za or by calling the NCR on 011 554 2600.