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In-depth guides

Debt Counselling Guide

19 January 2024

Countless consumers in South Africa are carrying debt that they are unable to keep up with. Because of the current economic situation, consumers’ incomes are not increasing enough to keep up with rising inflation and interest rate spikes. To then keep up with debt repayments too, becomes extremely challenging and even unsustainable.

Not sure what your debt situation is? Start by figuring out your debt-to-income ratio. If your debt repayments are 40% or more of the income you earn, you are at high risk of being over-indebted and could benefit from a debt management solution such as debt counselling. Your debt-to-income ratio can only go down if your debt goes down (and if your income goes up, which is not a reality for most of us in these challenging times). If you find yourself in this situation, you should get help before the problem gets too big for you to handle.

What is Debt Counselling?

The National Credit Act of 2007 formally introduced the process of debt counselling, which is a debt solution that is very carefully handled. When someone is feeling debt-stressed and is found to be over-indebted, a debt counsellor may help them through the process of debt review. Through debt review, you’ll be able to get back in charge of your finances and make your monthly debt payments.

The process of debt counselling facilitates a smoother route to the end of debt. In the process, a debt counsellor will negotiate with creditors on behalf of the over-indebted person, to lower monthly payments and interest rates. In addition, the debt counsellor readjusts the client's financial plan and budget, considering the new interest rates and payments. As a result, the client will be able to make monthly repayments that they can actually afford.

Debt Counselling vs Debt Consolidation

It is a common misconception that the only way to consolidate your debts, you will need to open a new account, which could be in the form of a personal loan or a new credit card. Consolidating your debt does not have to involve taking out a new loan. Instead, you can combine various debt repayments into one — creating one payment from all your monthly debts, at lower interest rates and new payment terms.

There are consolidation loan options out there that could be seen as an easier way to repay debt. However, they come with tremendously high-interest rates and additional charges. From there, it often only gets more difficult to solve the debt problem.

Real, effective and more affordable debt consolidation is found in debt review, where you have one, lower monthly payment.

Who Can Apply for Debt Counselling?

Any consumer in South Africa who is found to be over-indebted, can apply. After analysing the client's financial situation, the debt counsellor will reach a conclusion. After conducting the assessment, if the debt counsellor determines that the client is overindebted, only then will he initiate the debt review process. In other words, you must be overindebted — or be on the verge of being overindebted — to qualify for debt counselling.

Only consumers who already have an income can apply. It does not matter what kind of income you bring in. If you are unemployed, then you — unfortunately — will not be accepted into the process of debt counselling.

Understanding the Debt Review Process

Debt review is the process whereby a debt counsellor assesses a client’s outstanding debt and implements a restructured debt repayment plan. This will be done through the process of renegotiating interest rates with credit providers to reduce them, as well as by extending the debt repayment terms.

A new affordable monthly budget and payment plan will be drawn up by a debt counsellor, which will provide the client with a sort of “spending guide”.

While undergoing debt review, it is important to remember that clients are required to make only one monthly payment to a payment distribution agency. From there, the clients' credit providers will be taken care of. This reduces the stress of having to keep up to date and on top of multiple debt repayments.

What to Expect During Debt Review

The initial phase of your debt counselling session will be devoted to providing an overview of your current monetary circumstances. To build a spending plan that is appropriate for your financial situation, you will work alongside a debt counsellor to examine your circumstances. Throughout the process, the debt counsellor will also guide you in creating better spending habits. Let’s dive a little deeper into some of the things you’ll go through.

Details collections

This is where you provide your debt counsellor with all the information you have related to your debt and your necessary monthly expenses. This happens at your first point of contact with the debt counsellor.


In the first part of the review, the counsellor will check if you qualify for debt counselling. The debt counsellor will notify all your credit providers, the NCR and the credit bureaus of your successful application for debt review. The credit providers will adjust their systems to show you are under debt review.

Budget creation

Here you can expect to take a deeper look at your expenses to create a budget that now fits in with your debt payment plan. You’ll assess your current financial situation, and then a new budget will be created to make sure you’re able to pay your monthly debts. The debt counsellor will discuss your household budget and advise on the many areas (insurances, bank fees, groceries & many more) where you can save money. This will enable you to pay off your debts in the shortest period possible. For example, saving 8% of your monthly spendings you can save enough to equate to a 13th cheque TAX-FREE.

Creditor negotiation

You'll be pleased to know that this is where the counsellor deals with credit providers on your behalf. A reputable debt counsellor has great relationships with the banks and creditors, so they will negotiate with the creditors to restructure your debts and current payment structure. Your debt counsellor will create a detailed proposal to make it more manageable for you.

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Restructure plan

Once you have approved the new repayment structure from your debt review payment plan, the debt counsellor will submit it to the Payment Distribution Agency. This is where your monthly repayments will go. From there, they will be paid to your various creditors on your behalf.

The Importance and Benefits of Debt Counselling

Now that we understand the process of debt review a little bit better let's look at the importance and the advantages of debt counselling.

Legal protection

Whilst under debt counselling, you'll benefit from certain sections of the National Credit Act. Creditors will not be able to take any legal action against you and everything will be dealt with by your debt counsellor.

Reduce monthly payments

If you have many different credit accounts, you will now enjoy a single monthly payment to the payment distribution agents who will then pay your various creditors.

Financial guidance

A debt counsellor comes with a host of financial experience and knowledge, and therefore when undergoing debt review you can benefit from the financial guidance of a seasoned professional.

Interest protection

While under debt review, you also no longer have to worry about added interest on your debts.

Assets protection

When working with the debt counsellor, you are paying all of your debts back without the added interest; gaining legal protection as well as protection of your owned assets. This means that because you are under debt review and are paying your debts back, creditors will not be able to take any owned assets.

debt counselling

Understand the Cons of Debt Counselling

While debt counselling is a fantastic way to get yourself out of a sticky financial situation, there are a few things you will not be able to do while undergoing the debt review process. Let's explore these in more detail.

No more credit while under review

While under debt review, although it might seem obvious, you will not be able to open any more credit accounts until the process is completed and you get your clearance certificate.

Miss no payments

Once you have settled and finalised your payment plan, you can't miss any payments. If you miss a payment, your whole plan for making payments could be cancelled. For your debt review to work, you must make each monthly payment as planned. If you don't, you could put your debt review agreement at risk, and your repayments can default back to the higher instalments.

Documents Required for Debt Counselling in South Africa

  • ID document
  • Pay slips
  • Credit provider statements
  • Bank statements
  • Marriage certificates
  • Any other financial documents

Sign up to see if you qualify for Debt Counselling with DebtBusters

Find a real solution to being overindebted with DebtBusters. We aim to have you debt-free within 60 months!

Your 10-Step Debt Counselling Plan

Step 1

Contact DebtBusters by calling 086 999 0606 or filling in the Free Callback inquiry form. A consultant will contact you quickly to discuss and understand your financial situation, before explaining the advantages, process and cost savings debt counselling will give you. We will then send you an application form with a list of documents we require, for the process to start.

Step 2

After receiving your application we will do an assessment to check if you are over-indebted. We will also do a credit check and make sure that all accounts have been included. If found over-indebted, we will continue to step 3. If not over-indebted, we will advise you of our other debt management options.

Step 3

We will notify all your credit providers, the NCR and the credit bureaus of your successful application for debt review. The credit providers will adjust their systems to show you are under debt review.

Step 4

We will discuss your household budget and advise on the many areas (insurances, bank fees, groceries & many more) where you can save money. This will enable you to pay off your debts in the shortest period possible, as by saving 8% of your monthly outgoings each month, this equates to a 13th cheque TAX FREE.

Step 5

The credit providers are required to send us information regarding your accounts including the outstanding balance, interest rate, the monthly repayment and whether legal action has started. Once we have this, we will then update all the information into our debt management system to confirm that you are over-indebted and confirm this with your creditors.

Step 6

We will send you the agreed budget, which outlines the amount available to your credit providers, as well as the list of creditors included in your debt obligation list.  The consultant will give you details of the amount you have to pay, where you pay it and when. Payments will be made to a NCR registered Payment Distribution Agency, which will pay each creditor.

Step 7

DebtBusters ‘Negotiation’ team use 2 systems, DCRS & Pro-Rata to calculate the amounts for each credit provider. We will then send proposals to each credit provider outlining your agreed budget, the number of creditors included and the repayment plan for each credit provider

Step 8

If Credit Providers accept the proposals, we will advise you of the next steps and the legal process. If certain creditors don’t accept the proposed repayment plan, the Negotiators will discuss the amount required and create a new proposal. If the final proposal is not accepted, we will advise you to start a legal process and for a magistrate to make the final decision.

Step 9

You are required to make the agreed monthly payment each month to the Payment Distribution Agency (PDA) for the duration of the debt review. Each year DebtBusters will review your budget as part of our service.

Step 10

Once all your debt is repaid, DebtBusters will issue you with a clearance certificate which we will send to all your credit providers, the NCR and the credit bureaus. Within 5 business days you credit record will be clear.

Experience Financial Freedom with DebtBusters

Our expert team offers personalised debt counselling services to help you manage and reduce your debts effectively. Take the first step towards a debt-free future and contact DebtBusters today. Your path to financial freedom is just a call away!

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