Over-indebted consumers urged to seek help from debt counsellors
This stage is reached when available income is not enough to pay for basic living expenses and debts
THE National Credit Regulator (NCR) has encouraged consumers to be proactive and seek help when they notice signs of over-indebtedness and financial distress.
This stage is reached when available income is not enough to pay for basic living expenses and debts.
NCR’s manager for debt counselling, Kedilatile Legodi, said loss of employment, salary cuts, medical bills, rising fuel prices, food and cost of living in general and overspending are some of the reasons why consumers end up being over-indebted.
‘The National Credit Act introduced debt counselling as a debt relief measure aimed at assisting and rehabilitating consumers.
‘This assistance is provided by debt counsellors registered with the NCR through negotiation with credit providers and reduction of monthly contractual payments in line with the consumer’s disposable income, whereas rehabilitation is realised through regular reduced payments until the debt is paid up and a clearance certificate is issued,’ said Legodi.
She said when consumers are under debt counselling, they receive protection against legal action by credit providers and for as long as they maintain payments of their monthly reduced payments.
‘Consumers who are married in community of property have to make a joint debt counselling application.
‘There is no prescribed and fixed debt counselling repayment term and the period that a consumer remains under debt counselling depends on the consumer’s income, basic living expenses and the type of debt the consumer has.
‘Once all debts have been paid up under debt counselling, the consumer will be issued with a clearance certificate to show that they are debt free,’ she said.
Legodi, however, urged consumers to fully understand the process before applying for counselling.
‘Debt counselling is a relief measure to cope with the financial distress and they must continue paying their debts until these are paid up.
‘It does not in any way give consumers a break from paying their debts,’ Legodi said.
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