Tips for overindebted South Africans — how to spot dodgy debt counsellors

A rising interest rate environment and high inflation mean that 30% of all South Africans who have debt are delinquent – in other words, they have been in arrears for three months or longer.

DebtBusters’ Q4 2023 Debt Index shows that debt counselling enquiries increased 46% and demand for online debt management was up 54% compared with the same period in the previous year. The demand for debt counsellors is high, but there are many unscrupulous practitioners out there who prey on overindebted consumers.

Benay Sager, chairperson of the National Debt Counsellors’ Association (NDCA), says you should use this checklist when you choose a debt counsellor:

Check the number. If you receive a cold call or text message from someone offering you a debt counselling service, hang up and verify the number independently. An app such as Truecaller can help you check whether the caller is who they say they are.

Ask if you can visit their premises. Reputable debt counsellors will have formal premises and should have all the facilities to keep proper records. Ask for the address and visit their offices if this is practically possible, or ask someone in the vicinity to check it out for you. This will help to sort genuine debt counsellors from the chancers.

Ask which payment distribution agency (PDA) they use. Debt counsellors cannot take payments directly from you and have to work through a PDA. The four PDAs registered with the National Credit Regulator (NCR) are CollectNet, DC Partner, Hyphen and Intuitive. If a debt counsellor says you can make direct payments to them rather than a PDA, alarm bells should ring.

Ask for the debt counsellor’s NCR registration number. All debt counsellors must be registered with the NCR. The registration numbers are a combination of letters and numbers – for example NCRDC0000 – with the three or four digits at the end being the registration number. You can verify their details on the NCR website.

Ask for the debt counsellor’s registration number, then verify this on the NCR database and also Google their location.

Check whether they belong to a professional debt counselling association. Find out whether the debt counsellor is a member of a professional body or association. Membership details will usually be displayed on their website and this should give you an assurance that they adhere to industry standards.

Ask them to explain the process and what support you can expect. Reputable debt counsellors should be able to clearly explain the debt counselling process and answer any questions or concerns you have. You can consult the NDCA website, where you can also find a list of commonly asked questions.

Debt counselling usually takes between three and five years, during which you will not be able to get credit. The debt counsellor should ex­­plain what support framework – phone number, email address, client service resources, etc – is in place to guide you through the process.

Sign up only after a full assessment has been done. Reputable debt counsellors will offer you a free assessment, usually over the phone, because most consumers prefer the anonymity and convenience of a call. “Be wary of anyone who suggests an outcome or repayment plan to encourage you to sign up for debt counselling before they’ve done a full assessment. Even a basic assessment should include information such as your marital status, income, debt obligations and living expenses,” Sager warns.

If you apply for debt counselling, your debt counsellor will review your financial situation and work out a new budget that al­­lows for living expenses and debt repayments.

The debt counsellor will negotiate revised debt repayment agreements with your creditors. However, you have to pay counselling fees for different aspects of the service, which is part of your monthly repayment through a PDA.

Note that your structured debt rearrangement can be taken either to a magistrates’ court or the National Consumer Tribunal by your debt counsellor. DM

Debt counselling fees

• Application fee: R50 paid upfront.


• Administration fee: R300 paid upfront.

• Restructure fee: Maximum of R8,000 for a single application and R9,000 for a couple married in community of property. This is usually the first payment in your restructured debt plan and is usually paid upfront.


• Reckless lending fee: R1,500 upfront. This applies to reckless lending assessments and investigations.


• Aftercare fee: 5% of the distributable amount (your total monthly debt repayment) up to a maximum fee of R450 per month. Paid monthly.


• National Consumer Tribunal (NCT) submission fee: R750 one-off paid to the debt counsellor. You also have to pay an NCT filing fee, which is currently R621.14 and increases every year in April.


• Attorney or legal fees: These must be agreed upfront with an attorney or legal firm when you apply for debt counselling.


• Payment distribution agency fee: R15 per creditor. DM