163. Debt Counseling, Demystified

Contact Chantelle: 

 chantelle@ssdebtcounsellors.co.za

https://ssdebtcounsellors.co.za/

071 641 8088

Feeling cornered by debt even though you’re working hard? We sit down with Chantelle from S&S Debt Counseling to unpack a proven, legal way to reset your repayments under South Africa’s National Credit Act. Together we walk through how debt counselling protects you from aggressive collections, restructures instalments to what you can truly afford, and builds a simple single payment that actually shrinks balances.

We start with the real reasons people become over indebted: overtime cuts, job changes, and rising living costs that push budgets past breaking point. Chantelle explains the first signs creditors see, the Section 86 notice, and why acting within days can pause legal action. From there, we map the full assessment of your household budget, show how negotiators reduce instalments and often interest, and explain how a court order locks in the plan so banks must cooperate.

The conversation gets practical. You’ll hear a clear example of turning a R10,000 surplus into a structured repayment that covers all accounts. We unpack why the snowball method frees you faster by closing small debts first and rolling those payments forward. We also dive into behavioural shifts: no new credit while under review, cutting up cards to end the swipe cycle, and using a semi-cash system to rebuild control. With regulated Payment Distribution Agencies handling money flows and transparent statements for you and creditors, the process stays clean and accountable. We close with alternatives like bank rearrangements, the risks they carry, and why legal protection often makes the difference between constant stress and steady progress.

If debt has you feeling stuck, this conversation offers a map, a shield, and a plan. Subscribe, share with someone who needs hope, and leave a quick review telling us the one question you still have about debt review so we can answer it next time.

Transcript

SPEAKER_01 0:12

Hello everybody, welcome to Know Your Money. I'm Bronwyn Wayner.

SPEAKER_00 0:16

And I'm Craig Finch, and we are from Growth Financial Planning. We hope you enjoy our podcast.

SPEAKER_02 0:23

Hello everybody. Welcome to Know Your Money. Today we hello Craig. Today we have Chantel from SNS Debt Counseling. And she's just going to be here to explain a little bit what debt counseling is and when you should consider putting yourself under debt counseling. And yeah, Chantal, welcome and thank you.

SPEAKER_00 0:43

Welcome, Chantal.

What Debt Counseling Really Is

How Overindebtedness Happens

SPEAKER_03 0:45

Thank you, and thank you for having me. Awesome. Quickly to explain what, let's start at what debt counseling is, because there is so much negative social media out there regarding debt counseling. We have been doing debt counseling since 2008. Debt counseling came into play when our government signed in the National Credit Act into South Africa in 2007 to regulate credit and debt given by creditors to any client. When the Credit Act was signed in, it became um they saw that a lot of clients are over indebted, meaning that they have too much debt and too little money. So they borrow from Peter to pay poor. With that said to regulate the credit market in South Africa, debt counsellors came into play. We got proper education and training at the University of Pretoria Law Department. So it's not a legal diploma, but you have to be very, very educated in the legal system. So that's how debt counseling came into play is to assist clients that can no more borrow money to live on and find themselves totally overindebted. You can also become overindebted by um overtime that's been cut, maybe losing another income in the household. Um there's a lot of ways or being removed from your current position at a job, going to a lower division of a new job. There's so many reasons for your income not to be sufficient to service your debt anymore. You have money, just not enough. So now what?

SPEAKER_00 2:58

So your debts are getting bigger and bigger, is that what you're saying?

SPEAKER_03 3:01

And what are you doing?

The Assessment And Restructuring Process

SPEAKER_00 3:03

Yeah.

SPEAKER_03 3:04

Debt counselling came in is where we sit with a client and you do a proper financial analysis of their household income. Then you make sure that there's what is the money that the household needs for the living expenses every month: rent, food, petrol, car, insurance policies. Then what is left over of the household income that must be allocated to debt? That amount is then rearranged to repay debt at a lower instalment. So it's a debt restructuring program, it's a legal program. Um we restructure your debt repayment to lower instalments so that it's affordable for you to settle your debt. And that is our goal is to make people debt free.

SPEAKER_00 4:14

Sorry to interrupt you there. You take all the debt that they have, let's say credit card, car, home loan, and you put it into one pot.

Legal Shield And Section 86 Notice

A Simple Budget Example

Negotiations And Court Orders

SPEAKER_03 4:23

That's what we do. So debt counselling process starts as follows. Um let's start at the beginning. When a client becomes in a certain situation where he cannot service the actual debt repayment due to every creditor every month. And the credit provider picks this up. The credit provider has to send a specific letter to the client. It's called a section 86B. In this letter, the creditor tells the client, I see that you are struggling to pay your debt timelessly and to the amount you, you can do the following, under which is please go for debt counselling. And that's usually where we pick the clients up, or the client comes up before he gets his letter. Also, this letter states that if you do not go see a debt counsellor within seven working days, we will have to proceed with legal action. So debt counselling stops any legal action that the creditor may or try to impose on a client that cannot service his debt anymore. So it I always tell clients it's like in the olden days, you're under the yellow sometime umbrella. I don't know if you can remember that advertising, so it keeps you safe. So I'm gonna do just a very quick example. Let's um take for example, we have a household with an income of 20. The monthly expenses to keep this household running is 10. So we've got 10,000 rand left to service their debt. But the total debt repayment of their house, their car, their credit cards, loans, doctors, it doesn't matter, is 16,000. So they have money to repay the debt, just not enough. So a client comes to us, there's a certain procedure that we follow. The procedure is on our website, put out beautifully exactly every step in which we contact the clients or the household's creditors and say, right, he applied for debt counselling, stop everything that you're busy with the client, and then the creditor takes the file and hands it over to their debt review department, where there is trained employees that know the process. On that, the creditors give us information and all the particulars of every loan that the client has, and then we take the 10 that the client has and we divide that 10 between all the creditors that he owes money as a repayment. Let's say your bond was 10, we can reduce it to six. A lot of creditors are very lenient, and if we see it should be, the interest rates are reduced, and there is some cases where we make the interest rate zero because this client will never get out of debt. Because the instalment that we offer the creditor, the reduced instalment, doesn't even cover interest. So there is serious legal negotiations that do go on in the back.

SPEAKER_00 7:42

And do you do that on behalf of the client?

Payment Strategy And Snowballing

SPEAKER_03 7:45

Oh yes. Oh yes. The client does not take any call, any letter, nothing. He's not he's not my back. We're in the forefront. You do have creditors that still continue phoning clients and and bullying them, as we call it, and intimidate them. And it's a client just need to be strong and say, sorry, I'm under debt counselling, and by law, you cannot touch me or speak to me. Speak to my debt counsellor. And then the next process is we have a certain time that we do the negotiations and then the legal matters tell. So we do take the whole file to court, in which we, as the debt counsellor, act on behalf of the client and we summons all his creditors to say, if you do not like our repayment proposal, come to court. We have never not received a granted court order on behalf of the client, and then the creditors have to restructure their debt, their system to allow the client to repay his debt.

SPEAKER_00 8:47

Then do you pay, say, the the store that they might owe money or the credit card, or do you pay that first and you try and get rid of that? Or does everybody get a little piece of it until it's paid?

SPEAKER_03 9:03

You know what? It is kind of like a domino effect, what we try to implement, like the smaller ones first. You'll um a debt review instalment will always stay ten. It will never reduce, it will never go up, it will always stay ten. Let's say you have ten creditors, so we always try and pay the smallest one finished, and then the the first creditors instalment goes to so number one becomes the repayment of number one and two, and when number two is finished, number one, two's instalment goes to number three. So this far, um, I mean, we've been going on since 2008, and we have clients that have settled all their debts, including their home loans, before the contractual um instalment or contractual agreement with them in the bank, where they would have paid back the house in 15 years, it was settled in 25.

SPEAKER_00 10:04

And if the client is in debt review and you've consolidated the debt, are they able to take out more debt?

SPEAKER_03 10:12

No, that's where the hard part comes, and that is where the counselling comes in with the client, where you have to um assist them and guide them and support them into a new way of living, where there is no more a release card, there's no more a credit card. From now on, we can you can call it the semi-cash system. What is in your bank is what you have. And we make the people cut up their credit cards. We've got a big job in our office and says, if you're really committed to this process, here's a scissor, give me your cards. It is it's very hard for them, but you know what, it takes two, three, four months, and we do support them emotionally and mentally. Um, I'm that's until our registered DPT therapist, so there is struggles where we also help um marriage problems. We help, you know, debt brings a lot of trauma into a household. Husbands, wives, and and that's a big part of the healing process, not just to get them out of debt, but also to um build up their self-esteem because there's nothing like not being able to pay your debt and being hounded.

SPEAKER_00 11:29

Does the legal system stop them opening another credit card?

Alternatives Before Debt Review

SPEAKER_03 11:34

Absolutely. They are the National Credit Regulator is a system that is linked to all the credit bureaus in South Africa, and we do register clients on this system, and they it's like a little code. So when a client wants to apply for credit and the credit provider checks on his IP, the credit bureau, experience, or transunion, or whichever one of the big ones, there is a note that this client is currently under debt review, and by law, no credit is allowed to give him any more debt.

SPEAKER_02 12:13

And is there any step a person can take before debt review that you recommend?

How Payments Are Distributed

Closing And Where To Get Help

SPEAKER_03 12:18

A lot of creditors do have a debt rearrangement department where you can renegotiate your debt repayments with the bank. Um and if that is the way you want to go, I always advise to go. But it you're not protected, it's a side agreement that you have with the bank. So do you default, even with like we've seen people defaulting with 10 Rand where they haven't paid the full rearranged repayment, creditors took legal action, yeah, and also because of um just to put in there that with the debt review, we as debt counselors do not touch the client's money, we're not allowed to. There is distribution agencies that has been approved by the national credit uh regulator that we use with proper programs that we are all linked to. So the client makes a I'm gonna go back to my example, makes the 10,000 grand payment into the PDA's account, and then our proposal distribution on what money must go where. That's how we work on the system. So we don't get the money, the money goes into the distribution agency and it is distributed as we have um suggested and the court order confirmed on behalf of the client. And then the client has access to their statements, access to their distribution, so they always see where their money is going, and so do we, and so do the creditor.

SPEAKER_02 14:02

Great, thank you so much, and it was an informative session. And if anyone is struggling, your details will be in the bottom of our episode.

SPEAKER_00 14:13

A good service you offer. Thank you.

SPEAKER_02 14:15

Thank you.

SPEAKER_00 14:16

Thank you for listening. If you have enjoyed this podcast, would like to subscribe, please visit our website www.growthfp.co.za. The information we have provided in this podcast is our personal opinion. For more detailed information, please discuss your financial situation with a financial planner.