A good debt counsellor will negotiate on your behalf with your creditors for a lower interest rate, and/or new repayment terms, and consolidate your debt where this is the best course of action to take.
Be aware, however, that in seeking this kind of assistance, you will need to reveal the intimidate details of your financial life. Before you hand over your bank statements and other sensitive information, be sure to ask your chosen debt counsellor the following ten questions, as recommended by the Debt Counsellors Association of South Africa (DCASA).
Tip: Apply for debt counselling today by clicking here and filling out the form.
1. Are you accredited by the NCR?
Under the auspices of the National Credit Act (NCA), every debt counsellor must be registered with the National Credit Regulator (NCR), and have a NCRDC number. This number can be verified by calling the NCR on 0860 627 627.
2. What services do you provide?
Right from the start, know how the process is going to work, and how long it’s going to take. You want to know that when you can start leading a financially healthy life.
3. How much is it going to cost me?
There are three different fees that a debt counsellor may charge, these being application, legal, and restructuring fees. Before you get started with the process, ask what the fees will be, and how much the process will cost you in total.
Find out too when your creditors will start getting paid. Usually your first two instalments will go toward fees.
4. Which payment distribution agency are you with?
Every debt counsellor should be affiliated with a payment distribution agency (PDA). The PDA approves your final debt payment plan, before you pay your new set of monthly instalments.
5. Are you being investigated by the NCR?
The NCR is not permitted to reveal who is under investigation, but it’s wise to ask your debt counsellor. If they are under investigation, you should consider finding a different debt counsellor, or ascertain the charges against them.
6. Is your fee structure in line with the NCR?
This goes back to question three. There are set NCR guidelines relating to fees that a debt counselling firm must follow. If not, they could be overcharging you.
7. Are you planning to leave the industry?
If a debt counsellor is looking to leave the industry, or sell their client book, you have a right to know. This could interrupt your counselling process and affect you and your repayment plan.
8. Can I make a joint application?
If you and your partner are both struggling with debt, you can jointly apply for debt counselling. According to the DCASA this is recommended for couples, and is compulsory for couples married in community of property.
9. Will I have to sell some of my assets?
This is unlikely, but it will be raised by your debt counsellor if it becomes necessary. Normally the debt counselling process is put in place so that people can keep their assets.
10 If I was under debt counselling before, can I sign up again?
If you were under debt counselling, paid up all of your debts, and became overindebted again, it will be a much easier process and the creditors and court will be much more willing to help.