People picture a debt counsellor as someone who phones the bank on your behalf and somehow makes the debt smaller. That is part of it, but it misses most of the job. A debt counsellor does four distinct things, and understanding them is the difference between knowing what you are signing up for and hoping for the best.
1. Assessment
First we work out whether you are actually over-indebted, which is the legal test for debt review. We look at your full debt portfolio, your income, and your essential living expenses. If what you owe each month exceeds what you can reasonably afford after the basics, you qualify. If it does not, a good counsellor tells you so rather than signing you up anyway.
2. Negotiation
This is the part people imagine. We approach each of your credit providers and negotiate a reduced interest rate and a longer repayment term. On unsecured debt like credit cards and store accounts, rates often come down to between 0% and 5%. The result is a single monthly payment that fits your budget instead of breaking it. The debt is still yours, you are still paying it, but the terms now work for you.
3. Court Protection
The restructured plan goes to the magistrate's court to be confirmed as a court order. This is what makes debt review more than a friendly arrangement. Once the order is in place and your counsellor has filed the Form 17.1 notifying creditors, Section 86 of the National Credit Act protects your assets. Creditors cannot repossess your car, sell your home in execution, or garnish your salary while you keep paying the plan.
4. Distribution and Aftercare
You pay one consolidated amount each month to a registered Payment Distribution Agency, which splits it across all your creditors according to the court-confirmed plan. The counsellor stays with you for the life of the review, typically 36 to 60 months, handling queries, adjusting if your circumstances change, and finally issuing your Form 19 clearance certificate when the debt is settled.
What a Debt Counsellor Does Not Do
Three things, to clear up the common myths. A debt counsellor does not lend you money. A debt counsellor does not pay your debts out of their own pocket. And a debt counsellor never takes your payment into a personal account, it always goes through the registered PDA. If anyone offers you those things, they are not doing the job described here.
For the bigger picture, including how to find and verify one, see our guide to working with a debt counsellor in South Africa, or read what the process looks like end to end in how NCR debt review works.
Reviewed by Rowan Breeds, NCR-registered Debt Counsellor (NCRDC2423), Debt Solutions 4U.
Frequently Asked Questions
What does a debt counsellor do?
A debt counsellor assesses whether you are over-indebted, negotiates reduced interest rates and longer repayment terms with your creditors, takes the restructured plan to the magistrate's court for a confirming order, and arranges for your single monthly payment to be distributed to creditors through a registered Payment Distribution Agency. They do not lend you money or pay your debts for you.
Does a debt counsellor pay my debts for me?
No. A common myth. The debt counsellor restructures and administers your existing debt, but the money is always yours. You make one consolidated monthly payment, which a registered Payment Distribution Agency splits across your creditors. Anyone who says they will pay your debts and you pay them back is describing a loan or running a scam.
Does a debt counsellor talk to my creditors so I don't have to?
Yes. Once your debt counsellor files the Form 17 notifying your creditors, they handle the negotiation and communication. Under Section 86 of the National Credit Act, creditors and their collectors are restricted from contacting you directly to demand payment while you are under debt review and paying your confirmed plan.
How long does a debt counsellor work on my case?
The active restructuring and court process takes weeks to a few months to set up. After that, the counsellor provides ongoing aftercare for the life of your debt review, typically 36 to 60 months, until your debts are settled and your clearance certificate is issued. You are not left alone after signing up.
What qualifications does a debt counsellor need in South Africa?
A debt counsellor must be registered with the National Credit Regulator and hold an active NCRDC number. Registration requires meeting the NCR's training and competency requirements under the National Credit Act. Our lead counsellor, Rowan Breeds, is registered as NCRDC2423 and holds a BCom in Finance from UNISA.
