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Debt Counselling: Helping you Manage your Debt

04/07/2012 • • by
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Debt counselling (also known as debt review) was established in South African in 2007, with the introduction of the National Credit Act. The National Credit Regulator (NCR) was established as the regulator under the National Credit Act and is responsible for the regulation of the South African credit industry. One of its tasks is to register debt counsellors in compliance with the National Credit Act. Debt Counselling enables over-indebted consumers to seek relief in accordance with the National Credit Act. Debt Counselling was introduced to provide relief to consumers who are over indebted. It can be summarised as a procedure whereby a consumer who can no longer afford to meet all their monthly debt obligations applies to be placed under debt review with a debt counsellor. The counsellor who will then negotiate with the consumer's existing creditors for reduced monthly repayments to satisfy their credit agreements. A debt counsellor will calculate a monthly amount which consumers can afford, after deducting all budgeted basic living expenses. This means that a debt counsellor will establish your monthly income, deduct your living expenses, and the balance will be used to satisfy your debts. As a part of debt counselling, you pay a monthly amount to your debt counsellor, who will then pay over an agreed amount to all of your creditors. The main criteria is that you must have an income in order for your debt counsellor to make a reasonable proposal to your creditors. Once you have successfully applied for debt counselling, your debt counsellor will send notice to all of your creditors of your status, and will also pre-arrange with your creditors a monthly amount (less than the original instalment) to be paid over to start settling your debts. Basic living expenses get priority before making provision for credit repayments. Debt counselling provides you with more breathing space without getting into trouble with your creditors for paying less than the original instalment amount. Whilst under debt counselling, creditors may not take legal action against you for the repayment of your debts. As soon as you have settled all of your obligations under debt counselling, your debt counsellor will issue a clearance certificate, indicating that you are now rehabilitated. This will ensure that the debt review status is removed from your credit profile, allowing access to credit again. You can also read Consumer's Acces to Credit by Jenna Moritz. Contact Jenna Moritz Attorneys (JMA) for any advice or assistance in this matter or for any other credit-related issue: Cell: 072-129-4791 Fax: 086-551-9984 Email: jenna@jennamoritz.co.za

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