How does the National Credit Act protect consumers?faq

  • By providing for a debt relief mechanism whereby debt obligations can be restructured to reduced and affordable installments in the event of a consumer being over-indebted.

Is debt review a loan?

  • The debt review process is not a loan.
  • On the contrary, the debt review process entails that a consumer settles his payment obligations with his own funds, but which payment obligations are restructured to reduced amounts affordable to the consumer with due regard to the consumer’s income and required monthly living expenses.

Who can assist an over-indebted consumer?

  • A registered debt counsellor and who would have attended a course in debt counselling and successfully passed an examination.
  • A debt counsellor is monitored by the National Credit Regulator and is duty bound to abide the dictates of the National Credit Act and the guidelines issued by the National Credit Regulator from time to time.

What is the role of the debt counsellor?

  • To act as mediator and to negotiate in good faith with a consumer’s credit providers so as to obtain, in the final instance, a debt restructuring order of court in terms whereof a consumer’s monthly payment obligations to his credit providers are reduced to affordable amounts.

What is the relationship between the debt counsellor and the consumer?

  • The relationship requires utmost good faith and it is therefore imperative that a consumer trusts the debt counsellor, takes the latter into his confidence and makes a full and truthful disclosure of his financial affairs and circumstances.
  • In the final analysis, the debt counsellor and the consumer effectively forms a partnership of purpose to the end of providing the consumer with complete financial peace of mind and ultimately rendering the consumer debt free.

Who may apply for debt-review?

  • Any consumer who is over-indebted.
  • A consumer will be over-indebted if, after having provided for his necessary monthly living expenses, he is unable to afford his payment obligations unto his credit providers.

When should one apply for debt counselling?

  • A consumer who is over-indebted and experiencing difficulty in making ends meet and/or honoring his monthly payment obligations to his creditors, should ideally act pre-emptively by applying to a debt counsellor for debt review before his creditors institute legal proceedings against him.
  • In the final analysis, should a consumer need protection from his creditors or be at risk of losing his home, motor vehicle or other assets, the consumer should consider applying to a debt counsellor for debt review.

What are the benefits of debt review in terms of the National Credit Act?

  • A consumer’s payment obligations unto his creditors is reduced to affordable installments after provision has been made for his required monthly living expenses
  • Whilst under debt review, no legal action whatsoever can be taken against a consumer and a consumer enjoys absolute lawful protection from the creditors.
  • A consumer’s joy of life and complete financial peace of mind is restored and he can once again lead an affordable and normal economic life with hope and confidence in the future.

Who will pay the credit providers once the debt restructuring order of court has been obtained?

  • A consumer can pay his credit providers directly in accordance with the debt restructuring payment plan, but this is not advisable.
  • Alternatively, a consumer can make use of an accredited payment distribution agent approved by the NCR and which is the preferred and safer route.

When and how will the debt review process come to an end?

  • The approach is to endeavor to render a consumer debt free as soon as is practically possible.
  • Obviously, the higher the restructured installment is, the sooner a consumer’s debt obligation will be settled.
  • Once the consumer is debt free, the debt counsellor will issue a clearance certificate and the debt review process comes to an end accordingly.