Counselling carries a cost

● Debt counselling is the process through which your debts are rearranged so that you can repay them in a manageable way without being harrassed by creditors.

It does not cater for people who are unemployed and without an income.

And it comes at a cost. You pay the debt counsellor an upfront fee and an ongoing fee, and you may incur another cost if you make your repayment through a distribution agent.

Sometimes debt counsellors advise you to pay via an emoluments attachment order on your salary, which adds yet another layer of costs.

The rearrangement of your debt can include extending the term of the debt. This rearrangement can be made an order of the NCT or a magistrate’s court.

Mareesa Kreuser, a regional executive at Summit, says the average consumer in debt counselling has about seven credit agreements, depending on the debt counsellor’s clientele.

“The average debt is about R350,000 and monthly commitment R13,000.

“These averages will again depend on the counsellor’s clientele.”

Kreuser says it takes between four and 12 months to obtain a debt review order, depending on whether your debt counsellor applies to the NCT or a magistrate’s court for the order.

An NCT order can be obtained only if all the credit providers consent to the debt repayment plan.

“If all credit providers don’t consent, or the debt counsellor is challenging reckless lending, the matter must be referred to the relevant magistrate’s court. In this case, the court order can take between six and 12 months to obtain.”