Understanding debt counselling in SA can help consumers to put aside their worries of financial difficulties and better understand their rights with regards to creditors and legal action.
Banks are the leading credit providers in South Africa, offering everything from credit cards to home and personal loans. They also provide debt consolidation loans, overdrafts and vehicle finance and because of this, the promulgation of the National Credit Act in 2007 had a marked effect on their credit practices.
The advent of debt counselling in SA has led to a more empowered consumer and the increasing awareness of the banks when it comes to granting credit. South African banks are made aware of debt counselling, and can in turn assess the credit worth of a prospective credit applicant. Debt counselling in SA will inform a bank that the consumer can no longer cover monthly expenses, and the banks must comply with the regulations set in place by both the National Credit Act and The Debt Counselors’ Code of Conduct regarding consumers who are under debt review.
Banks are striving for better debt collection processes and as these processes evolve, so the relationship between South African banks and indebted consumers is improving. Though there have been incidents of banks not agreeing to a debt counsellors’ proposal, these incidents are declining.
The process of debt counselling in SA dictates that a bank may not collect outstanding funds from consumer who has applied for debt counselling for 90 days following the application, to ensure that the consumer has time to arrange their new payment plan and set it in motion.
As the main credit providers in South Africa, banks have an obligation to work hand-in-hand with debt collection agencies to ensure the successful recovery of outstanding debts in a fair manner. Thanks to debt counselling in SA and the bank’s increasing awareness of possible over-indebtedness, banks are now far more stringent when approving credit and recent years have seen a marked decline in bad debts occurring