When should you apply for debt counselling?
It’s important to understand that debt counselling is not for everyone. If your debt is manageable and you’re not in over your head, it may be best for you to handle your debt independently or seek an alternative financial solution.
However, if you’re struggling to make ends meet and your debt is only increasing, debt counselling might be exactly what you need.
The NCA describes an over-indebted consumer as someone who is unable to meet their debt payments at the end of each month.
“The act also states that if the debt counsellor has completed an assessment and has reached the conclusion that a consumer will not be able to meet their debt commitments at the end of a month, then that consumer is over-indebted,” according the NCA.
If a debt counsellor concludes that you’re not over-indebted, they will send you a letter of rejection. If you disagree with this outcome, you can approach the court within 20 business days to have yourself declared over-indebted.
If you’ve received a Section 129 Notice, then you should immediately apply for debt counselling. This is usually your last chance to apply for debt counselling. If your creditors are dissatisfied with your actions following a Section 129 Notice, legal action will be taken against you and you’ll no longer be able to apply for debt counselling.
You may be rejected from debt counselling if you’re unemployed. However, if you can prove that you receive a steady income through other means, such as a government grant or a fixed allowance, your application may be approved.
If you lose your job while under debt counselling, it’s important to immediately contact your debt counsellor and explain how your financial situation has changed. The counsellor will then be able to reach out to your creditors and renegotiate your monthly repayments.
If you have credit life insurance in place, this will kick in if you’re retrenched and the fund will assist you with your monthly repayments.