Considering Debt Counselling? 7 Things You Need to Know

Debt counselling is a legal process introduced in South Africa by the National Credit Act (NCA Act 34 of 2005) to assist over-indebted consumers in repaying their credit obligations without facing asset repossession.

If you are feeling overwhelmed by mounting monthly repayments and creditor calls, here are seven critical facts you must understand before applying:

1. Immediate Protection From Creditors

Once you submit your Form 16 application, your debt counsellor issues a Form 17.1 notice to all credit bureaus and lenders. By law, this prevents creditors from taking legal action, obtaining judgment, or repossessing your vehicle or property.

2. Substantial Reduction in Monthly Installments

Your debt counsellor negotiates directly with banks and credit providers to reduce interest rates (often down to 0% - 5%) and extend repayment terms. Monthly debt obligations are frequently reduced by 45% to 65%.

3. A Single Monthly Payment

Instead of paying multiple credit cards, vehicle finance loans, and store cards separately, you make one consolidated payment to an accredited Payment Distribution Agency (PDA), which distributes the funds to your creditors.

4. Regulated Statutory Fee Structure

Debt counselling fees are strictly governed by the National Credit Regulator (NCR). There are zero upfront out-of-pocket costs — all fees are incorporated into your restructured monthly payment plan.

5. No Further Credit During Review

While under debt review, credit bureaus reflect a debt counselling status to prevent reckless lending. This is a statutory consumer safeguard to help you become fully debt-free.

6. No Court Appearance Required

Debt Cue's appointed legal counsel attends the Magistrate Court on your behalf to finalize the consent order, meaning you do not need to attend court in person.

7. Clearance Certificate (Form 19)

Once all unsecured debts are settled according to the restructured plan, your Debt Counsellor issues an official Form 19 Clearance Certificate, and all credit bureaus are legally required to remove the debt review record from your profile.