Debt Counselling in South Africa: How the NCR Process Works
Debt counselling is a formal debt relief process introduced by the National Credit Act 34 of 2005 and administered by the National Credit Regulator (NCR). It allows over-indebted consumers to restructure their debt repayments through a registered debt counsellor, protecting them from legal action by credit providers while they repay. It is not a write-off of debt, but a structured repayment plan confirmed by a court or the National Consumer Tribunal.
Contact the National Debt Mediation Association (NDMA) on 0861 628 628 for free, impartial advice on whether debt counselling is right for your situation.
Are You Over-Indebted?
You are considered over-indebted under the NCA if you cannot meet all your debt obligations on time from your net income after deducting basic living expenses. A registered debt counsellor will assess your income, expenses, and debts to make this determination formally.
How to Apply for Debt Counselling
- Find a registered debt counsellor on the NCR's website at ncr.org.za. Only use counsellors registered with the NCR.
- Complete Form 16 (application for debt review) and submit it to the debt counsellor along with your ID, proof of income, a list of all debts and credit providers, and bank statements for 3 months.
- The debt counsellor notifies all your credit providers within 5 business days that you have applied. From this point, credit providers may not take legal action against you for 60 business days.
- The counsellor determines whether you are over-indebted and proposes a restructured repayment plan.
- The plan is submitted to the National Consumer Tribunal or a magistrate's court for a consent order, making it legally binding.
Do not use unregistered 'debt fixers' or companies that promise to remove your name from credit bureaus for a fee. These are scams. Only NCR-registered debt counsellors may provide debt counselling.
Effect on Your Credit Record and Finances
Once you apply for debt counselling, the credit bureaus are notified and your credit profile is flagged with a debt review status. You cannot take on any new credit while under debt review.
When you have paid off all your restructured debt and obtained a clearance certificate (Form 19) from your debt counsellor, the debt review flag is removed from your credit record. This can take several years depending on the amount owed.
Costs and Payment Distribution Agents
Debt counselling fees are regulated by the NCR. The counsellor may charge a once-off application fee (currently R50), a restructuring fee (capped at one month's restructured instalment up to R8 000), and a monthly after-care fee (limited to 5% of the payment but no more than R400 per month).
Your restructured monthly payments are made to a registered Payment Distribution Agent (PDA), who distributes the money to your credit providers. The NCR maintains a list of approved PDAs.
Exiting Debt Counselling
- Complete repayment: when all debts are paid, apply for a clearance certificate (Form 19)
- Voluntary withdrawal: before the court order is granted, you may withdraw if you can pay all arrears
- Rejection: the court may reject the proposal if it is not feasible – you remain liable for your debts
- Termination by credit provider: if you miss payments after the court order, a credit provider can apply to terminate the debt review