On 1 June 2007 the National Credit Act (NCA) came into effect and shortly after someone that is over in debt could apply for Debt Counselling.

Debt Counselling was introduced to provide a process for helping a customer with over indebtedness. It also provides a consistent system of debt restructuring, enforcement and judgement, which places priority on the eventual satisfaction of all responsible for the consumer obligations under the credit agreements.

The process of Debt Counselling was developed to offer a way out for consumers who cannot meet their monthly obligations under current credit agreements; after all basic living expenses have been paid. Basic living expenses get priority before making provision for credit repayments. Debt counselling provides you with more breathing space without getting into trouble with your creditors for short payments.

South Africa has recently had a lot of people fall into the debt trap by over-extending themselves and taking out a lot of credit which, despite the national credit’s act’s attempts, people can’t afford at all. You might have fallen into debt and now realize that it is time to change and clean up your credit history. There are a number of ways to clear your debt, and one of the most effective is to get yourself debt counselling.

Debt counselling is a way for you to manage the paying off of your debt, and what many do not realize is that it is actually a way for you to finish off paying your creditors, your debt does not get excused as this is not a bankruptcy plan. The process involves you working with a debt counselor so that they may help you set up your budgets, help reduce the monthly repayments amounts to your creditors, and in some cases to reduce your debt by negotiating lower interest rates.

Debt counselling also helps you to see how you can avoid bankruptcy, manage your debts better, see which debts are bad for your financial well being and help you figure out a budget for you.

It is legally required that you be fully employed and receiving a salary so as to show that you are able to service your current debts.You will have to be classified as over-indebted in order for you to be protected by debt counselors