Understanding the laws surrounding debt counselling in SA and the rights of both consumers and creditors can help consumers to put their minds at ease and overcome their financial worries. Though the law can be a daunting thing to understand, both the National Credit Act and the implementation of debt counselling in SA have made it easier for consumers to understand their own rights and be protected from legal action when they have sought out the services of a debt counsellor.
Debt has become a serious problem in South Africa that is no longer restricted to over-spenders and low incomes. With fluctuating interest rates and the rising cost of living, many South Africans have found themselves turning to credit cards and credit providers just to stay afloat.
The increase of South Africans turning to credit has led to many people sitting with fistfuls of bills at month end, furiously working out how to cover their debts, which is why, under the National Credit Act No. 34 of 2005, debt counselling in SA was introduced to help people manage their debt and find a feasible solution to indebtedness. The Act established under it the National Credit Regulator, which is tasked with protecting both the consumer and the creditor and to ensure fair credit practices, and all creditors and debt counsellors alike must be registered with them.
Because of the National Credit Act, consumers can now apply for a payment schedule that meets their budget by seeking out a registered debt counsellor who will negotiate with their creditors on their behalf and establish a fair payment plan. The Act stipulates that consumers should be referred to debt counselling before any legal action is taken against them for lapsing on debt payments.