Debt counselling
KW Attorneys debt counselling department is known as DebtHealth. Visit the DebtHealth website here: www.debthealthsa.co.za.
Frequent Questions
What is debt counselling?
Debt counselling is a process that was introduced by the National Credit Act to assist consumers who have high debt levels and are in trouble. The aim of debt counselling is to restructure debt and establish a repayment plan that is supported by creditors or that is found by the court to be fair in the circumstances.
Consumers are still protected by the National Credit Act, and by paying one monthly instalment to a payment distribution agent, who is registered and accredited, all creditors are repaid in an amount agreed upon with such creditors.
In this way the consumer reaches a position where he/she can still survive on a monthly basis.
Why debt counselling?
Household debt levels in South Africa are extremely high often put consumers in a position where they incurred much more debt than they could repay monthly.
The National Credit Act was enacted to protect consumers by introducing several measures, including debt counselling. Debt counselling is a process aimed at putting consumers in a position where they need not lose everything or be sequestrated but will be able to settle their debt in a legal and structured manner. At this stage it is the best process to follow in South Africa when it becomes clear that a person’s debt simply has become unmanageable.
Are my debt levels such that I may go for debt counselling?
If a person is over-indebted, he/she is amenable to debt counselling. Being over-indebted simply means that at the time of assessment of debt levels such a person is not capable of meeting his or where financial obligations in terms of credit agreements in good time, bearing in mind such person’s financial ability or future financial ability.
How does it work?
Steps 1 to 5 will take approximately 60 days. The steps below are what a typical debt counselling process will entail.
Steps
Step 1
Complete a debt counselling application form (Form 16). You will need the following:
- A list of all your creditors
- A copy of your identity document/s
- A recent payslip/s
- Latest creditor statements
- Bank statements for the last three months
- Proof of residence
- Any legal documentation from creditors
Step 2
Kruger Wilkens Attorneys will inform all your creditors that you are over-indebted and are going for debt counselling. You are now indemnified against any legal action.
Your debt counsellor will now look at your budget and calculate a reduced preliminary monthly instalment while ensuring that you will have enough cash to live on. Your debt counsellor will also request all your creditors’ outstanding balances during this step.
Step 3
A provisional debt repayment plan is drawn up. It is important to know that this is a provisional plan that is submitted to all your creditors. The creditors will provide us with the proposal responses.
Step 4
Your debt counsellor negotiates with all creditors on your behalf to establish and agree upon a reasonable and affordable repayment plan. Depending on negotiations with creditors, your debt counsellor may possibly have to adjust or restructure the plan.
Step 5
If a repayment plan is agreed upon with all your creditors, an application is submitted to the Magistrate’s Court. Once the court order has been given or the repayment plan has been approved by the Court, you have to adhere to the granted order.
EXAMPLE OF RESTRUCTURING OF DEBT
Type of Loan | Contractual Payment | New Payment | Saving |
Home loan | R 11 900.00 | R 9 520.00 80% of your contractual installment | R 2 380.00 |
Vehicle | R 3 856.00 | R 2 699.20 70% of your contractual installment | R 1 156.80 |
Personal Loan | R 3 839.63 | R 2 411.48 Settle within 60 months | R 1 428.15 |
Credit Card | R 4 431.13 | R 2 461.86 Settle within 60 months | R 1 969.27 |
Total: | R 24 026.76 | R 17 092.54 | R 6 934.22 |
* This is just seen as an indication of what we achieved, your personal repayment plan may vary*
Why us?
- We can provide you with a Free no-obligation quote in order for you’re to make an informed decision.
- We are registered and monitored by the National Credit Regulator.
- We offer life-changing solutions to consumers that are over-indebted.
- Our friendly staff is available during the process to provide the clients with advice and support.
- We always have the clients’ best interests at heart.
- We ensure that you repay all your debt through one lowered and affordable monthly installment.
- We monitor our clients’ payments and monitor the client’s progress consistently.
- We help you to regain financial control and to get financial peace of mind.