Your ultimate guide to debt counselling in South Africa

If you've heard about debt counselling, but you're not really sure what exactly it is or you know a bit about it, but you want all information about the process in one place, this is the blog post you need to read. 

Debt counselling meaning

Debt counselling, also referred to as debt review, in South Africa is a legal process that aims to help people struggling to make their monthly debt repayments. It's a process that started with the National Credit Act and is regulated by The National Credit Regulator (NCR). 

If you've cut down on everything you possibly can and you still find that you can't pay for everything, know this:

1. You aren't alone. So many South Africans are struggling to make ends meet. 
2. There is a way out of what seems like an impossible debt situation. You don't have to continue struggling. 

How does debt counselling work?

Below have a look at the debt review process step-by-step:

1. You first apply for debt counselling. You can do this by filling out this simple contact form. 
2. One of our expert Debt Counsellors will call you back and conduct a financial assessment for you. This is done to see if you are actually over-indebted (unable to make your debt repayments). 
3. If you are, the Debt Counsellor will work out a new, reduced repayment plan for you. Our clients end up saving up to 50% on their monthly debt instalment!
4. We get into contact with your creditors and negotiate for reduced interest rates on your loans on your behalf. 
5. Creditors agree to the new proposed repayment plan and a court order gets put into place. This means this new repayment plan is now legally-binding. 
   • The good thing about this is:
     • Creditors can no longer call you off the hook, harassing you to make payments. 
     • Your house and your car are legally protected from repossession. 
     • We go to court on your behalf, you don't have to worry about a thing!
6. You start making your debt counselling payment. With debt counselling, your multiple debts and multiple loans are consolidated into one payment. This means you could end up not only saving money, but your entire debt repayment process will be easier too!
7. You continue making this single debt counselling payments each month until you've successfully completed the entire process. 
8. Once you've completed the entire debt counselling process, you are issued with a debt review clearance certificate. 

Advantages of debt counselling

• The chance to get your life back and focus on other things instead of constantly worrying about money. 
• Creditors stop harassing you over the phone. 
• You could end up saving up to 50% on your monthly debt instalment. 
• You keep your house and your car. These assets are legally protected when you are undergoing debt counselling. 
• With Meerkat, a chance to start an emergency savings fund to ensure you stay out of debt. 

Read: Emergency fund - why and how you should start

Watch this video with Founder & CEO of Meerkat, David O'Brien as he speaks to financial journalist, Maya Fischer-French about the pros and cons of debt counselling.

Disadvantages of debt counselling

• The biggest con that most people see with the debt counselling process is that once you are in the process, you can no longer apply for new loans or more credit. 
  • This is actually done to protect you from getting yourself into further debt. The reality is, you can't get out of debt by creating more debt. While taking out a new loan may provide temporary relief, you now have an extra bill to pay on top of your mountain of bills. 
  • It's also done to safeguard your current creditors who have given you lower interest rates on your loans.
• Once you have applied for debt counselling, you have to complete the entire process. You can't voluntarily exit the process earlier if you decide it's not for you. 
  • This may seem scary because it's a big commitment, but you, and your debt-free financial future are worth it!

Is debt counselling a good idea?

Debt counselling is a great idea for anyone who is struggling to pay all their debt every month. It is a legal way to get out of debt without taking out another loan. 

Who qualifies for debt counselling in South Africa?

To qualify for this programme, you must be currently employed and you must be unable or struggling to make your debt repayments each month. Not sure if you qualify? Let us give you a debt assessment to see if you do!

How much does a Debt Counsellor cost?

Usually, the first two months of your debt review monthly payment will be dedicated towards the fees for the debt counselling process. This means that you don't have to worry about additional fees other than your monthly debt counselling fee. 

These fees are also never paid directly to a Debt Counsellor, but rather through a Payment Distribution Agency (PDA). If a Debt Counsellor ever requests fees directly from you, this should be seen as a red flag!

While the fees are regulated by The National Credit Regulator and there are maximum amounts the process is allowed to request from consumers, your specific debt review monthly payment will depend on how much debt you have and how long you will be paying for that debt. This exact amount will be unique based on your unique financial situation. 

Why Meerkat?

Meerkat has been voted as one of the Top 10 Large Debt Counsellors in South Africa!

We have registered Debt Counsellors.

Our clients have given us a 4.38 out of 5 rating on HelloPeter. 

Great service

"Thank you to Meerkat for helping me get rid of my debt, your consultants were extremely friendly and helpful throughout the time I was with you guys, you always answered my questions and were willing to assist, will highly recommend to anyone needing assistance."
- Padmini M

We've already helped thousands of South Africans become debt-free, we will help you too!