The National Credit Act (NCA) and Debt Counselling
The National Credit Act (NCA) came into effect on the 1st of June this year and is now granting consumers the right to apply for debt counselling. Registered Debt Counsellors are the only ones that can provide debt counselling.
Nedbank is one of the largest lenders in South Africa, and has always offered financial advice to clients, including those that are in financial difficulty. Credit providers cannot be debt counsellors, but Nedbank still offers debt counselling via a dedicated Nedbank Debt Rehabilitation and Recovery Department.
The following questions and answers are intended to assist you in understanding debt counselling.
1. What is a Debt Counsellor?
It is an independent person registered with the National Credit Regulator to assist consumers who are over-indebted. They will review the credit obligations of every application to assess whether the credit agreements entered into were reckless and/or whether the debt of the consumer should be restructured to make it more affordable. Debt Counsellors will make restructuring proposals for over-indebted consumers to credit providers and inform credit bureaus. Over-indebted consumers will not be eligible for further credit agreements until their financial status has been rehabilitated.
2. What is the role of the Magistrates Court?
Following a review of the consumers application, the Debt Counsellor can recommend that the Magistrates Court:
• deem some or all of the credit agreements reckless,
• extending the term of the loan
• deferring payments
Debt Counsellors are there to assist over-indebted consumers in rehabilitating their financial status and overcome certain barriers. They will educate consumers on spending and saving and help them clear their bad debts.
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