Quick Facts

• Legal process under the National Credit Act to help over-indebted South Africans
• Protects you from legal action and asset repossession
• Must use NCR-registered debt counsellor
• Cannot get new credit while under debt review

What is Debt Counselling?

Debt counselling (also called debt review) is a legal process under South Africa’s National Credit Act. It helps people who are over-indebted by reducing their monthly payments and protecting them from legal action.

When you’re under debt counselling, a registered debt counsellor negotiates with your credit providers to reduce your monthly payments. This creates one affordable payment plan that covers all your debts.

What “over-indebted” means: You cannot meet your debt payments without compromising your basic living expenses like food, transport, and shelter.

✅ How the Debt Counselling Process Works

Step 1: Application and Assessment

Contact a registered debt counsellor for a free assessment. They’ll review your income, expenses, and debts to determine if you qualify as over-indebted. This consultation is free and confidential.

Step 2: Application Submission

If you qualify, the debt counsellor submits Form 16 (debt counselling application) and notifies all your credit providers within 5 business days using Form 17.1. This stops legal action against you immediately.

Step 3: Debt Restructuring Plan

Within 30 business days, your debt counsellor prepares a repayment proposal. This plan extends your payment terms and may reduce interest rates to make payments affordable while covering your living expenses.

Step 4: Court Order

Once credit providers agree (or if they don’t respond), attorneys apply to the Magistrate’s Court to make your repayment plan a legal court order. This gives you maximum protection.

Step 5: Monthly Payments

You make one monthly payment to a Payment Distribution Agency (PDA), which distributes the money to your credit providers according to your court-approved plan.

Step 6: Completion and Clearance

Once you’ve paid off all your restructured debts, your debt counsellor issues a clearance certificate (Form 19). The debt review flag is removed from your credit record and you can apply for credit again.

💰 Debt Counselling Costs and Fees (2025)

All debt counselling fees are regulated by the National Credit Regulator (NCR). Here’s what you can expect to pay:

Fee Type	Amount	When Paid
Application Fee	R50	Upfront
Administration Fee	R300	Upfront
Restructuring Fee	Up to R8,000 (R9,000 for married couples)	Months 1 & 2
Legal Fee	R750 (for consent order)	Month 2
After-care Fee	5% of monthly payment (max R450)	Monthly from Month 3
PDA Fee	R15 per credit provider per month	Monthly

Requirements for Debt Counselling

Who Can Apply?

• South African citizens or permanent residents
• People who are over-indebted (cannot afford debt payments and living expenses)
• Must have regular income (salary, pension, business income)
• Married couples in community of property must apply together

Documents You’ll Need

• Copy of your ID document
• Three months’ bank statements
• Proof of income (payslips, pension letters, business financials)
• List of all debts and credit agreements
• Proof of monthly living expenses
• Marriage certificate (if applicable)

Who Cannot Apply?

• People already under debt review
• Sequestrated individuals
• Those with administration orders
• People with no regular income

✅ Benefits and Drawbacks

Benefits

• Immediate protection: Credit providers cannot take legal action or repossess assets
• Reduced payments: Single, affordable monthly payment
• No harassment: Credit providers cannot contact you directly
• Extended payment terms: More time to pay off debt
• Potential interest reductions: Some providers may reduce interest rates
• Professional guidance: Expert help managing your finances

Drawbacks

• No new credit: Cannot apply for loans, credit cards, or store accounts
• Credit record flag: Shows you’re under debt review
• Longer repayment period: May take years to complete
• Total cost may be higher: Extended terms mean more interest over time
• Fees: Must pay debt counsellor and PDA fees

🚨 Warning: Debt Counselling Scams

The NCR has issued warnings about fraudulent debt counsellors placing people under debt review without consent. Here’s how to protect yourself:

Red Flags to Watch For

• Cold calls offering “debt consolidation” or reduced interest rates
• Pressure to sign documents immediately
• Asking for payments directly to the debt counsellor’s account
• Cannot provide NCR registration number
• Using unregistered Payment Distribution Agencies
• Promising to remove you from debt review for upfront fees

How to Verify a Debt Counsellor

• Check the NCR website: www.ncr.org.za/register_of_registrants/registered_dc.php
• Ask for their NCRDC registration number (e.g., NCRDC1234)
• Verify they use registered PDAs: Hyphen, iPDA, CollectNet, or DC Partner
• Check if they belong to professional associations like DCASA
• Never sign documents on the first call

What to Do If You’ve Been Scammed

• Contact your bank immediately to stop unauthorized deductions
• Lodge a complaint with the NCR
• Report to the National Financial Ombud (NFO)
• Open a case at your local police station
• Request your credit report to confirm your debt review status

Alternatives to Debt Counselling

1. Debt Intervention (Coming Soon)

The National Credit Amendment Act introduces free debt intervention for people earning R7,500 or less with unsecured debt under R50,000. This allows for complete debt write-off in extreme cases but is not yet in force.

2. Voluntary Arrangements

Contact your credit providers directly to negotiate payment arrangements. Many are willing to work with you if you’re honest about your financial situation.

3. Administration Orders

For debts under R50,000, apply to the Magistrate’s Court for an administration order. This consolidates your debts but requires court approval.

4. Sequestration (Bankruptcy)

As a last resort, voluntary sequestration may write off debts but requires minimum asset values and has serious long-term consequences.

🏁 Exiting Debt Review

Option 1: Clearance Certificate

Once you’ve paid off all your restructured debts (except home loans, which must be current), your debt counsellor issues a Form 19 clearance certificate. This removes the debt review flag from your credit record.

Option 2: Court Application

If you’re no longer over-indebted but still have outstanding balances, you can apply to a Magistrate’s Court to exit debt review early. You must prove you can afford the original payment terms.

Option 3: Voluntary Withdrawal

If there’s no court order yet, you can withdraw voluntarily by notifying your debt counsellor in writing. However, this removes your legal protection.

Debt counselling can be a lifeline for over-indebted South Africans, but it’s a serious long-term commitment. Before applying, try negotiating directly with your credit providers or seeking free financial counselling from reputable organizations.

If you do proceed, always verify your debt counsellor is NCR-registered and understand all fees upfront. Remember, legitimate debt counsellors never pressure you to sign immediately or request payments to their personal accounts.

Most importantly, debt counselling addresses the symptoms, not the cause of your financial problems. Use this time to develop better budgeting habits and financial literacy to prevent future over-indebtedness.