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Question Debt Counselling and how it works

Will going under my debt review affect employment opportunities?

14 February 2024

In the past, debt counselling clients have had employment issues, due to a lack of understanding of the process. Employers had no idea how debt counselling worked, and thus rejected job candidates based on the “stigma” that comes with debt.

These days, things are - or at least should be - different. If you are under debt counselling, it should have no direct impact on your employment status or your employment opportunities. 

The history of debt counselling in South Africa 

The concept of debt counselling was introduced in 2007, in the National Credit Act. It was created to be a positive rehabilitation process to assist South African consumers struggling with debt. 

In addition, it helped employers to view those struggling with debt in a better light.

In the past, having debt was a major ‘red flag’ to employers. Now, when a consumer is under debt counselling, they are seen as a responsible consumer taking accountability for themselves and their situation. 

Another problem that the formal debt counselling process fixed, is creditors unfairly treating consumers in debt. Before debt counselling was introduced, creditors had freer rein to take excessive measures against consumers, and to lend more funds to consumers while being aware that they are already over indebted. A person under debt counselling is now protected from all of this. 

The importance of managing your finances 

In most occupations, it is generally expected that you can manage your personal finances correctly, especially if your occupation entails advising others on money management and financial products. 

This can be attributed to the fact that most employers will feel that if you cannot manage your own money properly; you will not be able to give other individuals sufficient financial advice.

Managing your finances well is also important for your personal wellbeing. Struggling financially can have an impact on our health, family, and many other aspects of your life. It also dictates the way your future looks. 

What happens if you cannot pay back your debt 

When you do not meet your debt repayments and do not address your debt problem, you will accrue defaults and judgements against your name. 

In other words, creditors will be chasing you down using whatever legal methods they choose, trying to acquire the payments you owe them. At times, creditors can go to the length of contacting a debtor's employer to retrieve the payment straight from their upcoming salary. 

While this - legally - should not impact your employment status, it may change the way your employer views you. They might see you as a person who does not take responsibility for their circumstances, or somebody who engages in risky financial behaviour. These things may not be true, but it is a common assumption people make. 

Taking control of your debt with debt counselling 

Debt counselling is a voluntary process and thus, by taking your own initiative to sign up for the process, you are taking a responsible step towards repaying your debts and showing your employer that you are making an effort to manage your finances properly.

All you have to do is get in contact with a registered debt counsellor and ask for assistance. They will ask you details about your financial situation and draw up a customised budget for you. From there, the debt counsellor negotiates with creditors to bring down interest rates and fees so your payments are more manageable, and you make one monthly payment to cover all your debts until everything is paid up!

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This solution is available to everyone, no matter what industry you are in. As long as you have a stable income, you will qualify for debt counselling. 

It is your choice to disclose being part of the debt counselling process 

If you would like, you can then let your employer know about the steps you have taken, to show that you are taking control. However, DebtBusters’ interactions with clients are strictly confidential and will not notify employers about the client's debt review status, if that is what the client wishes.

Will being under debt counselling impact your employment search?

Being under debt counselling should not have any effect on your job search. Being under debt counselling is a good and responsible choice. It is actually in your best interest to show potential employers that you are working to manage your finances better. 

When do employers run credit checks on potential employees? 

We’re sure you know that employers do various types of checks before hiring a new employee, like a criminal record check, for example. Another type of check some employers might do is a credit check. 

Jobs in the financial industry may run credit checks 

It is not common for companies to do credit checks, as it costs money and can be time consuming. However, it is not something that is illegal or out of the question - so it is possible. Most commonly, credit checks are performed only for people applying for roles in the finance industry - such as accountants, or bookkeepers. This is because you have to be financially responsible and careful if you are in this type of role. 

If you are looking for a new employment opportunity and an employer conducts a credit check whereby they notice that you are under debt counselling, it should not have an impact on your chance to obtain the job. 

DebtBusters can help 

However, if necessary, DebtBusters can provide clients with a letter stating that they are under debt counselling and inform the employer about the process. Please note though, that this letter will only be provided on explicit request by the client - as debt counselling is a confidential process. 

The positive impacts of being under debt counselling 

When you go under debt counselling, you receive many personal benefits - like the protection of your assets, the peace of mind that your family is taken care of, and the ease of making only one, lowered monthly payment. 

There are benefits to your work life too though. 

First and foremost, you are less stressed and thus can give more energy to work, making you more productive and efficient. 

In addition, the debt counselling process teaches you important skills like discipline, planning, personal management, personal responsibility and accountability, and patience. These will all be useful to you in the workplace as well. 

Struggling with debt? Get help now! 

If you find yourself stuck in a tricky debt situation and are worried your employment may be at risk because of it, then reach out to DebtBusters. We’ll help you get your debt sorted, and provide advice and protection when employers or creditors treat you unfairly. Fill in our call-back form to get assistance now! 

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