The Money TipYour checklist when choosinga debt counsellor

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

DebtBusters’ debt index for the last quarter of 2023 shows that debt-counselling enquiries increased by 46%, and demand for online debt management was up 54%, compared to the same period the previous year.

However, many unscrupulous practitioners prey on over-indebted consumers.

Benay Sager, the chairperson of the National Debt Counsellors’ Association (NDCA), recommends the following checklist when choosing a debt counsellor:

Check the number: If you receive a cold call or text message from someone offering you debt-counselling services, 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 and from the company they claim to represent.

Ask if you may visit their premises: Reputable debt counsellors would 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 would help you distinguish between genuine debt counsellors and chancers.

Ask which payment distribution agency (PDA) they use: Debt counsellors cannot take payments directly from you and have to work through a payment distribution agency. 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 to 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 here. Also Google their location.

Do they belong to a professional debt counselling association? Find out if 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 an assurance that they are adhering 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 check what they tell you on the NDCA website here, 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 access 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 is 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.