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NCR Urges Consumers to Consider Debt Counselling to Defeat Debt

In a new press release, the National Credit Regulator (NCR) is encouraging consumers to embrace debt review as a realistic solution to their debt issues.

Kedilatile Legodi, Manager for Debt Counselling at the NCR, says that loss of employment, salary cuts, medical bills, rising fuel prices, food and cost of living in general and overspending are just some of the reasons why consumers are ending up being what is known as ‘over-indebted’.

What Does It Mean To Be ‘Over Indebted’?

A consumer is considered to be “over-indebted” if their available income as a household is not enough to pay for their basic living expenses as well as paying all their debts each month. The National Credit Act (NCA) introduced debt counselling in 2007 as a debt relief measure aimed at assisting and rehabilitating consumers who are over-indebted. This assistance should only be provided by Debt Counsellors who are officially registered with the National Credit Regulator. It usually involves some negotiation with credit providers and then going to court to organise and reduction of monthly contractual payments (what they should originally have been paying) to match a more realistic figure in line with the consumer’s actual disposable income. The consumer then pays monthly (these reduced payments) until their debts are paid up and a clearance certificate is issued.

Legal Protection

When consumers are under debt counselling, they get added protection against legal action that could be taken by credit providers as long as they maintain payments of their monthly reduced payments. This doesn’t mean that the credit providers might not try something via the courts but it does give the consumer added protection as a court will not waste time if debts are already being repaid via debt review.

In the press release, Ms Legodi explains that there is no prescribed and fixed debt counselling repayment term and the period that a consumer remains under debt counselling depends on the consumer’s income, basic living expenses and the type of debt the consumer has. Once all a consumer’s debts have been paid up through the debt counselling process, the consumer is then be issued with a clearance certificate that shows that they are debt free.

Get Help Sooner Rather Than Later

The NCR often worry about mixed messages that some adverts for debt review might send to consumers. At times, debt counselling is offered or is advertised as a ‘payment holiday’ or even some sort of weird ‘savings plan’ where consumers are promised to save up to a certain percentage of their monthly instalments. While consumers will naturally save where credit providers drop fees and interest rates, as they commonly do through debt review, the NCR says that this type of advertisement can be misleading and is prohibited. They want the public to know that ‘debt counselling is a relief measure to cope with the financial distress and that they remain responsible to continue paying their debts until they are paid up’. They stress that debt counselling does not in any way, give consumers a break from paying their debts, rather it provides them with a responsible and manageable way to pay off their debts each month.

be proactive and seek help immediately when [you] notice signs of over-indebtedness and financial distress’

The NCR urges consumers to ‘be proactive and seek help immediately when they notice signs of over-indebtedness and financial distress’.  Ms Legodi says that ‘debt should not be a silent killer or the end of the road for consumers, there is relief in debt counselling that leads to rehabilitation‘.

This positive message about the debt review process in this recent campaign is being sent out by the NCR to media outlets and TV and Radio news stations in an effort to get more people to make use of the process.