Understanding Debt Review

It is DCASA’s aim to develop a streamlined Debt Counselling industry by setting process guidelines and training Members, in addition DCASA aims to provide Members with various products and services that will allow them to effectively and professionally deliver Debt Review service for over-indebtedness Consumers.

Looking for a Trustworthy, Registered Debt Counsellor near you: Visit Here

 
01

Understanding Debt Review: Your Legal Right as a Consumer

Debt Review is a legal right for consumers facing financial difficulties. If you’re struggling to keep up with daily expenses and debt payments, you may qualify for the debt review process, which aims to provide structured debt relief.

The debt review process involves a detailed assessment of your finances by a registered debt counsellor, who examines your budget and monthly obligations. During this review, the counsellor evaluates if simple budget adjustments could improve your financial stability, or if you would benefit more from comprehensive debt restructuring.

If adjustments alone aren’t enough, the debt counsellor will request a Certificate of Balance (COB) from your creditors, providing a clear picture of your total outstanding debt. With this information, they determine if you’re over-indebted and whether debt review is the best path forward.

Once over-indebtedness is confirmed, the debt counsellor will create a tailored repayment plan that may include lower interest rates and reduced fees. By adhering to this plan, you’ll gain protection from creditors while paying an amount that’s manageable within your budget.

Benefits of the Debt Review Process:

  • Legal protection from creditor action.
  • Reduced monthly installments and interest rates.
  • A structured, step-by-step plan to regain financial stability.

 

Debt Review offers a supportive, legally protected way to manage debt and regain control over your finances.

02

How to Choose the Right Debt Counsellor

How to Choose the Right Debt Counsellor

Debt Counselling is a legal process and a right afforded to qualifying people who are struggling with their debt. It’s a process that ensures you get protection from litigation and affords an opportunity where credit providers reduces your monthly instalments, like any other financial sector there is always fraudsters who tries to take advantage.

Choosing the right debt counsellor is crucial for a successful debt review process. Here’s a simple guide to help you make an informed decision:

  1. Ensure They Are Registered
  • Why it matters: Only registered debt counsellors are legally allowed to provide debt review services in South Africa.
  • How to check:
    • Ask for their registration number with the National Credit Regulator (NCR). We call it a NCRDC Number, ALWAYS make sure you get the NCRDC first.
    • Verify their registration on the NCR website or call the NCR directly.
    • For additional protection, we have a list of trusted and good debt counsellors nationwide that can assist https://www.dcasa.co.za/debtcounsellor-search/ they range from small firms to large companies and you can choose.
  1. Look for Experience and Reputation
  • Why it matters: Experienced counsellors are better equipped to negotiate with creditors and handle complex cases, they have been in the industry for a long time and knows the process well.
  • How to check:
    • Look for reviews and testimonials online.
    • Ask for referrals from trusted friends or family who have used their services.
    • Check how long they’ve been in the industry.
  1. Assess Communication and Transparency
  • Why it matters: You need a counsellor who communicates clearly and keeps you informed throughout the process.
  • How to check:
    • During the initial consultation, notice how well they explain the debt review process.
    • Ask about their communication methods (email, calls, in-person meetings) and frequency of updates.
  1. Check Their Fees
  • Why it matters: Debt counselling has regulated fees, but it’s important to understand the costs upfront.
  • How to check:
    • Request a detailed breakdown of their fees, including the initial application, monthly fees, and court costs.
    • Confirm their fees comply with NCR guidelines.

DCASA has written an article on what you can expect to pay https://www.dcasa.co.za/what-fees-can-a-debt-counsellor-ask-during-the-debt-review-process/ - please do not believe the media when they state it is R10 000 or more to apply for debt review, debt review works on a sliding scale depending on what you pay to your creditors. If this details change DCASA will inform the public.

  1. Evaluate Their Support Services
  • Why it matters: A good debt counsellor offers comprehensive support beyond just repayment plans.
  • How to check:
    • Ask if they provide budgeting advice and financial education.
    • Confirm if they use a Payment Distribution Agency (PDA) to manage payments securely.
    • Never pay any monies DIRECTLY into a debt counsellors account, this is not in line with the act. Monies needs to be paid by a PDA ( which we recommend) or by yourself to each creditor.
    • Note there are currently four registered PDA’s (Hyphen, DC Partner, iPDA and Collectnet) if the Debt Counsellor tells you there is another Payment Agency they use it’s a RED FLAG.
  1. Verify Their Commitment to Confidentiality
  • Why it matters: Your financial information is sensitive and should be handled securely.
  • How to check:
    • Ask how they protect your personal and financial data.
    • Confirm they comply with privacy regulations like the Protection of Personal Information Act (POPIA).
  1. Ensure They Are Easily Accessible
  • Why it matters: You might need to reach your counsellor for urgent queries or updates.
  • How to check:
    • Look for a counsellor based in your area or one who offers reliable online services.
    • Check their office hours and availability for consultations.
  1. Avoid Red Flags
  • Why it matters: Scammers and unqualified counsellors can worsen your financial situation.
  • What to watch out for:
    • Promises to clear your debt or improve your credit score instantly (this is unrealistic).
    • High-pressure tactics or demands for upfront payments before services begin.
    • Lack of transparency about their registration or fees.
    • Calling themselves Debt Mediators
    • APPROACHING you to be transferred or be cleared from debt review, ask yourself how did they get your information.
    • Asking to pay monies into their account or making use of any other payment system that is not Hyphen, iPDA, DC Partner or Collectnet.

Final Checklist

  • Registered with the NCR? ✅
  • Positive reputation and reviews? ✅
  • Clear communication and fee transparency? ✅
  • Comprehensive support and secure services? ✅

Taking these steps ensures you partner with a trustworthy debt counsellor who can guide you toward financial stability with confidence.

 

03

What Fees can a Debt Counsellor Ask?

Debt counselling fees are divided into several phases: Phase 1 involves an upfront application fee of R50 when signing Form 16. Phase 2 includes a R300 administration fee, often incorporated into the first month's payment. Phase 3 entails a restructuring fee, capped at R8000 (single applications) or R9000 (joint applications), payable in Month 1, and an optional reckless lending investigation fee of R1500. Phase 4 covers legal fees for magistrate court applications or National Consumer Tribunal matters, aligned with disposable income. Lastly, Phase 6 involves a capped monthly aftercare fee of 5% of distributable income, up to R450. Debt counselling is regulated under the National Credit Act, and it's crucial to ensure your counsellor is NCR-registered to avoid risks from unregistered entities.

For more details, refer to the full https://www.dcasa.co.za/what-fees-can-a-debt-counsellor-ask-during-the-debt-review-process/ 

04

Knowing When The Right Time to Approach a Debt Counsellor

Recognizing the right time to seek help from a debt counselor is key to regaining control of your finances. Warning signs include struggling to make minimum debt payments, relying on credit for basic necessities, feeling overwhelmed by debt, receiving persistent collection calls, and experiencing significant financial stress. Additionally, facing risks like foreclosure or repossession indicates a critical need for professional assistance. A debt counselor can assess your financial situation, create a tailored repayment plan, and negotiate with creditors on your behalf. Acting early can alleviate financial stress and help you chart a path toward a debt-free future.

For the full article, click https://www.dcasa.co.za/knowing-when-the-right-time-to-approach-a-debt-counsellor/

05

Have you been scammed under debt review?

Falling victim to a scam where you're placed under debt review without consent can be distressing, but you have rights and recourse. Signs of fraud include unexpected deductions, unresponsive debt counsellors, blocked credit access, and suspicious communications. If scammed, verify your debt review status via the NCR, gather evidence, lodge a complaint with the NCR or National Financial Ombud, notify your bank, and file a police report. To protect yourself, always verify debt counsellor credentials, avoid sharing personal information, and monitor your finances closely. Stay vigilant and consult trusted resources like the NCR or DCASA for legitimate services and support.

For the full article, click https://www.dcasa.co.za/scammed-under-debt-review/

 

Become a DCASA Member today!

By becoming a member you will benefit from these great rewards and also have the opportunity to grow and improve the Debt Counselling industry.