Image of a man gazing out of a window for an article on moneysmart about the debt counseling process

The Debt Counselling Process Explained

20/03/2013 • • by Raul

Debt is quite similar to quicksand. Easy to step into, but once stuck difficult to get out of.

For this reason many individuals find themselves constantly struggling to get out of debt or sinking even further into it.

What is debt counselling?

Debt counselling is the process whereby debt counsellors assist consumers who are struggling to cope financially due to being overburdened by debt.

Debt counsellors provide the following services: 

  • Budgeting advice
  • Assistance in restructuring payments
  • Negotiating with creditors on your behalf
  • Monitoring payments
  • After-care services 

Debt counsellors are registered with the National Credit Regulator (NCR) and qualified to help you restructure your finances in a way that makes your debt and financial situation more manageable.

According to the National Credit Act debt counsellors cannot be part of debt collection agencies, credit bureaus or organisations that provide credit. You can approach debt counsellors directly for assistance or could be referred by your creditors or the magistrate’s court.

Signs you might require debt counselling:

  • Cannot afford to pay your monthly bills
  • Forced to borrow money to repay other debts
  • Need to use credit card and overdraft facilities to pay for debts and necessities
  • Skip payments on some accounts to pay others
  • Receive letters and summonses from creditors and/or lawyers
  • Have judgements against you

 The debt counselling process: 

Step 1
To begin the process, you provide the debt counsellor with details of your income, monthly budget and debt commitments. Copies of ID, payslip and latest debt statements must also be presented to the debt counsellor.

Step 2
The debt counsellor then conducts an assessment of your situation to see whether debt counselling is actually required. If it is, then a meeting will be arranged. 

Step 3
The debt counsellor reviews your existing budget and debt commitments. A new budget will be drafted to determine the amount available for debt repayment. The debt counsellor then discloses the costs involved and provides a debt repayment plan.

Step 4
The debt counsellor contacts all credit providers and credit bureaus to verify your existing debt. You are then listed as being under debt counselling on all credit bureaus. This listing is only removed once you have repaid all debts. The debt counsellor also negotiates repayments with your credit providers.

Step 5
Once credit providers accept the proposed debt repayment plan, a consent order is made by the local magistrate’s court. This is a binding legal document which formalises the acceptance of the debt repayment plan.

Step 6
At this stage the debt counsellor provides you with a final debt repayment plan, which is also submitted to a Payment Distribution Agency (PDA).

PDAs are accredited by the NCR as being responsible for collecting repayments and distributing them to credit providers in line with the restructured agreements. All debt counsellor fees are paid by the PDA. Fees therefore come out of the distribution amount paid each month by you.

The only entities that have been accredited as PDAs are:

  • National Payment Distribution Agency (NPDA)
  • Consumer Protection Excellence (CPE)
  • DC Partner
  • Hyphen Technology (Pty) Limited


How much does it cost?

Debt counsellors may receive the following payments:

  • R50 + VAT application fee in terms of the National Credit Act, Schedule 2 (2).
  • R300 (excl. VAT) rejection fee when application for debt review is rejected.
  • A restructuring fee less or equal to the first debt re-arrangement plan instalment– maximum R6000 (excl. VAT).
  • In case of a joint application the fee is still limited to R6000 (excl. VAT).
  • A monthly after-care fee of 5% (excl. VAT) of the debt re-arrangement plan monthly instalment– maximum R400 (excl. VAT) for a period of 24 months.
  • Thereafter 3% (excl. VAT) with a maximum of R400 (excl. VAT) for the remaining period.
  • Should the consumer withdraw from debt review after a certain stage, a fee equal to 75% of the restructuring fee will be payable.
  • R750 legal fee in the 2nd month for the debt counsellor to obtain the consent order.
  • Any additional cost for further legal processes. The debt counsellor should be able to present pro forma invoices issued by the attorneys involved. 

Debt counsellors are prohibited from collecting and distributing payments to credit providers once your debts have been restructured. A debt counsellor may never receive any payment from you, the consumer, apart from the normally charged R50 application fee plus VAT.

moneysmart tip: Be wary of any debt counsellor that might tell you otherwise. 

Image of the PSG logo
For all your financial planning requirements email Raul Jorge.


Bankruptcy 24. (2013). How does the Debt Counselling process work?. Available: http://www.bankruptcy24.co.za/index.php?option=com_content&view=article&id=242:debt-counselling-process&catid=83:debt-counselling&Itemid=41. Last accessed 17th March 2013.
Debt Counsellors Association of South Africa. (2013). Debt Counselling. Available: http://www.dcasa.co.za/services/counselling/. Last accessed 17th March 2013.
National Credit Regulator. (2011). FAQs – Debt Counselling?. Available: http://www.ncr.org.za/index.php?option=com_content&view=article&id=88. Last accessed 17th March 2013.
National Credit Regulator. (2011). Payment Distribution Agencies . Available: http://www.ncr.org.za/index.php?option=com_content&view=article&id=89. Last accessed 17th March 2013.
National Credit Revolution. (2011). Debt Counselling Fees. Available: http://www.ncrdebtcounsellor.co.za/debt-counselling/debt-counselling-fees.html. Last accessed 17th March 2013.

VN:F [1.9.21_1169]
Rating: 5.0/5 (1 vote cast)
VN:F [1.9.21_1169]
Rating: +1 (from 1 vote)

The Debt Counselling Process Explained, 5.0 out of 5 based on 1 rating

You may also like