How to Apply for Debt Counselling
If debt is squeezing your monthly budget, debt counselling (also called debt review) is a regulated, legal process that can help you restructure repayments, gain breathing space from creditors, and work toward becoming debt-free. Below is a clear, step-by-step guide to how to apply for debt counselling, what documents you’ll need, typical timelines, costs to expect, and what happens after you apply — all in plain language so you can act with confidence.
Quick overview — what happens when you apply
When you apply for debt counselling you:
- Complete an application form with a registered debt counsellor.
- The counsellor notifies your credit providers and requests account statements.
- A repayment proposal (a consolidated, affordable monthly instalment) is created and negotiated with creditors.
- If accepted, a Payment Distribution Agency (PDA) collects your single monthly payment and distributes it to creditors.
This process is regulated under the National Credit Act and is designed to protect you while a workable plan is negotiated.
Step 1 — Get a free assessment with a registered counsellor
Start by contacting a registered debt counsellor. A reputable counsellor will offer an initial, no-obligation assessment where you’ll explain your income, living expenses and current debt repayments. The counsellor will tell you whether debt review looks appropriate for your situation. Never proceed with a counsellor you can’t verify as registered.
Step 2 — Complete the application form (Form 16)
If you decide to proceed, you’ll sign Form 16 — Application by Consumer for Debt Review. This form captures personal details, full lists of credit agreements, your income and expenses, and a declaration that you are applying for debt review. Form 16 is the formal application the counsellor will lodge on your behalf. Keep a copy for your records.
Step 3 — Counsellor notifies credit providers (Form 17.1) and requests Certificates of Balance
Within days of accepting your application the counsellor will notify all your credit providers and credit bureaus using the required notification form. Credit providers are then obliged to provide a Certificate of Balance (COB) for each account so the counsellor can confirm exact outstanding amounts. These steps are designed to keep the process moving quickly.
Step 4 — Over-indebtedness assessment & draft repayment proposal
Using your income and expense information plus the COBs, the counsellor performs an affordability assessment to determine whether you are over-indebted. If so, the counsellor drafts a repayment proposal: a single consolidated monthly payment that aims to be affordable while still repaying your creditors. The counsellor will explain the proposed instalment, the included fees, and any potential legal steps (for example a consent order) if creditors do not agree.
Step 5 — Negotiation with creditors & (if required) court process
The counsellor negotiates the proposal with each creditor. Most creditors accept negotiated proposals; if not, the counsellor may refer the matter to court to obtain a binding consent order. This is a legal route used when negotiations don’t resolve by agreement. Your counsellor should keep you informed and obtain your consent before any legal application proceeds.
Step 6 — Payment distribution via a registered PDA
Once the repayment plan is agreed (or ordered), you’ll pay one consolidated monthly instalment to a registered Payment Distribution Agency (PDA). The PDA administers the payment and distributes funds to each creditor according to the agreed plan. The PDA process ensures payments are handled securely and transparently. You’ll receive regular statements showing how payments are allocated.
Documents you’ll typically need to apply
Prepare clear copies of the following to speed up your application:
- South African ID (or passport / legal ID)
- Latest payslips (usually last 3 months) or proof of regular income if self-employed (tax invoices, bank deposits)
- Last 3 months’ bank statements (all accounts)
- Statements for every credit agreement (credit cards, personal loans, store accounts, vehicle finance, mortgage, etc.)
- Utility bills and proof of essential monthly expenses (rent, school fees, medical aid, maintenance)
- Any court papers, summonses or repossession letters (if applicable)
Having these documents ready helps your counsellor complete Form 16 accurately and speeds up the creditor statement retrieval process.
Typical timelines (what to expect)
While exact timings vary, the process typically follows these rough timelines:
- Notification to credit providers and request for COBs: within a few days of application; creditors usually have a short period to supply COBs.
- Counsellor prepares and submits the repayment proposal: within a few weeks of receiving COBs (timeline depends on responsiveness of creditors and completeness of your documents).
- Negotiation period: can take days to weeks; if court involvement is required, expect longer due to court scheduling.
Throughout the process your debt counsellor should keep you updated and provide a clear schedule for expected steps.
Costs — what you should know up front
Debt counselling involves regulated fees that typically include initial administration, a restructuring fee (often equivalent to the first consolidated instalment, subject to caps), ongoing aftercare fees and PDA charges for handling payments. A transparent counsellor will provide a written fee schedule and show how fees are deducted from your consolidated instalment. Always ask for full fee disclosure before signing.
What protection does applying give you?
Once you’ve applied and the counsellor has notified credit providers, you’ll receive important protections under the law: creditors generally must stop legal action or repossession efforts for listed agreements (provided no legal action had already started). However, you will be recorded as being under debt review on your credit profile, which affects new credit applications. Your counsellor should explain this trade-off clearly.
After the plan starts — your responsibilities
- Make the consolidated monthly payment to the PDA on time each month.
- Keep open communication with your counsellor — if your income changes, tell them immediately.
- Do not apply for new credit while under debt review unless explicitly allowed.
Following the plan consistently is the way to complete the process and receive a clearance certificate when your debts are repaid as agreed.
Frequently Asked Questions (FAQs)
Q: How long does the debt counselling process take to set up?
A: The initial application and creditor notification happen quickly, but preparing a full, negotiated proposal usually takes several weeks depending on document completeness and creditor responsiveness.
Q: Will I be able to get new credit while under debt review?
A: Generally, no. Being under debt review is recorded on your credit profile and new credit applications are normally declined to prevent further indebtedness.
Q: Can I choose which accounts to include in the review?
A: You and your counsellor will discuss which accounts to include. Excluding an account may mean you must still keep paying it separately; discuss implications with your counsellor.
Q: What happens when I finish the plan?
A: When all agreed payments are completed, the counsellor issues a clearance certificate and notifies credit bureaus to remove the debt review listing from your record.
Q: How do I verify a counsellor is legitimate?
A: Ask for their registration with the relevant regulator and check the regulator’s register before signing any agreement. Legitimate counsellors will be transparent about fees and provide written documentation.
Final steps — choosing the right counsellor and applying
- Verify the counsellor’s registration.
- Ask for a clear, written fee schedule and a sample of the application and notification forms.
- Gather your documents (ID, payslips, bank statements, debt statements).
- Book the free assessment, sign the application if you proceed, and keep copies of all paperwork.
- Stay in regular contact with your counsellor and make your consolidated payment on time.
Applying early — before creditor action accelerates — gives you the best chance of successful negotiation and protection.
