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What are the advantages and disadvantages of debt counselling?

The National Credit Act (NCA) of 2005 introduced debt counselling as a measure to assist consumer struggling to service their debt.  Debt Sage has been helping many consumers become debt free through taking advantage of debt counselling. There numerous advantages for debt counselling and we discuss them here.


I am glad you asked. If you are considering to apply for debt counselling, it is very imperative to understand what the advantages of debt counselling are before signing up. The advantages of debt counselling are discussed below.

  • You cannot apply for new credit while under debt counselling. 

After a consumer has finished paying off their debt, a debt counsellor issues them with a clearance certificate implying that they have satisfied all their obligations under debt counselling. The consumer's listing on credit bureaus is lifted and is able to apply for new credit.

  • The consumer is flagged under debt counselling and but there is no permanent record of having undergone debt counselling on credit bureaus. 

Credit bureaus do not keep the consumer's record as having been under debt counselling. When the debt counsellor has issued the consumer’s clearance certificate, the consumer's record with credit bureaus is expunged. In terms of the National Credit Act 34 of 2005, a debt counselling order reflects on one’s credit report within the period prescribed in section 71(1) of the Act or until a clearance certificate is issued /

  • Your assets are protected while under debt review.

When one applies for debt counselling, the debt counsellor approaches the courts to obtain a court order from the courts which makes binding the restructuring plan that was negotiated with the credit providers. This stops any repossession activity.

  • While under debt review, interest rates on your accounts are reduced. 

The restructuring plan involves relooking and reducing interest rates with the credit providers. This benefits the consumer. Interest rates for credit cards, retail/ store cards/ personal loans can be reduced to 3-5% (DCRS rules based)

  • You pay one reduced monthly affordable amount that pays all your accounts.

When under debt counselling, the consumer pays one easy affordable amount that pays their debt.  Debt counselling consolidates your debt into a single manageable payment.

  • You will no longer receive calls from credit providers and lawyers demanding payment.

When under debt counselling, all collection activity stops.

  • Fees become payable while under debt review in month 1 and these fees are set by the law. Legal fees also become payable in month 2. Legal fees vary from one debt counsellor to the other.

All the fees payable while under debt counselling are worked into the consumer's repayment plan. This makes the debt counselling program affordable to the consumer.


There are disadvantages of applying for debt counselling. Here we discuss the disadvantages of debt counselling.

  • In terms of section 88(1) of the National Credit Act No. 34 of 2005, you must not incur any further charges under a credit facility or enter any further credit agreement whilst under debt review.
  • If the consumer misses his or her monthly payments while under debt counselling, credit providers terminate the application and institute legal action. It is important that the consumer sticks to the amount that were agreed to on the court order.
  • Not all accounts can be accepted on debt review. If there is a judgement (summons) on a home loan or motor vehicle, accounts cannot be included under debt counselling.
  • Once a debt review court order has been obtained a consumer cannot terminate or withdraw from debt counselling.  As part of the debt review process, the consumer can however approach the court to rescind the order or apply for an order which declares that the consumer is no longer over-indebted. This can be costly to process.
  • If you are married in COP and one is not struggling, you both have to apply.
  • You might take longer to pay off your debt as result of paying lower monthly instalments.
  • Fees become payable while under debt counselling in month 1 and these fees are set by the law. Legal fees also become payable in month 2. Legal fees vary from one debt counsellor to the other. Most of these fees are however be worked into your repayment plan.

However, if one is deep in debt, advantages for debt counselling outweigh the disadvantages of debt counselling. 

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