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  Legalwise Wiseup  
  31 January 2018  
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Getting to know the debt counsellor and the consumer

Kaitlyn realises that she cannot pay all of her accounts in order to settle her debt in a timely manner and starts to panic. She has heard stories of debt collectors and ruthless creditors squeezing every cent out of people because they cannot pay an account. Kaitlyn considers debt counselling and wants to know what is expected from her and the debt counsellor.

  • A person experiencing financial problems (“consumer”) may consider debt counselling as a way to keep his/her head above water. Debt counselling is also referred to as debt review.
  • Debt counselling is the procedure in which an over-indebted consumer applies to court to have his/her debt rearranged, for example, by reducing the monthly instalment amount and extending the period over which the outstanding balance is paid back to the credit provider (such as a bank who provided a personal loan).
  • The purpose of debt counselling is to rearrange a consumer’s debt in such a manner that s/he can meet his/her repayment obligations, without going bankrupt. The debt counselling process allows a consumers (with the assistance of a debt counsellor) to manage his/her debt and pay it off, even if it takes longer.

 Debt counsellor:

  • A debt counsellor must be registered with the National Credit Regulator before s/he can assist with debt counselling.
  • A debt counsellor is a person who assists a consumer to apply for debt counselling and to negotiate and rearrange his/her payments to credit providers.  A debt counsellor is more likely to get a positive response from the consumer’s credit providers when it comes to negotiations, as opposed to a consumer approaching his/her credit providers directly.
  • For example, a debt counsellor could assist a consumer with asking a credit provider to extend the period over which the consumer would make the repayments from five years to ten years. The extended period would enable the consumer to make the repayments more easily as the monthly instalments would be smaller.
  • The debt counsellor must notify the consumer’s credit providers and every registered credit bureau of the consumer’s application within five days after s/he received it.
  • The debt counsellor must then determine whether the consumer is over-indebted within 30 days of receiving the application.
  • If the debt counsellor determines that the consumer is over-indebted, s/he must report his/her findings and recommendations (which include a debt rearrangement proposal) to the Magistrates’ Court in order to obtain a court order.  
  • The debt counsellor is not allowed to pay money directly to the credit providers of the consumer. An accredited payment distribution (“PDA”) agency may be used to make payment to creditors.
  • The debt counsellor may charge a fee for the debt counselling services, as long as it is not more than the amount prescribed by law.


  • A consumer may apply to a debt counsellor to be declared over-indebted. If the debt counsellor determines that the consumer is not over-indebted, s/he may apply to a Magistrate’s Court him/herself.
  • After a consumer applied for debt counselling, s/he will not be allowed to enter into any more credit agreements.
  • While a consumer is under debt counselling, the creditors who have been informed of same cannot take legal action (for example, issuing summons) against him/her for the outstanding debt, unless the consumer fails to make payment while under debt counselling. However, if the credit provider took legal action against the consumer before s/he applied for debt counselling, the credit provider is not bound by the debt counselling and can take legal action against him/her.
  • If the debt rearrangement proposal has been made an order of court, the consumer has a duty to make the payments to his/her creditors in terms of that proposal (either directly or through a PDA).
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  Inside this Issue no 12  
Letter from the CEO
Legal Expenses Accidental Death Benefit
Getting to know the debt counsellor and the consumer
Actual case: Nedbank Limited v Jones and Others
Exit this way:
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What is an Administration Order?
What is an Emoluments Attachment Order (“EAO”)?
What is a Will?
Empowering the community of Zandspruit through financial literacy
Frequently asked questions
Making it easier for you to keep in touch
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