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Checklist when choosing a debt counsellor

Checklist when choosing a debt counsellor

There are so many people bad – mouthing Debt Counselling, one would think it was the grinch that stole Christmas!

Somehow, people fail to realise that debt counselling is just like every other industry in South Africa,  and you have good DC’s and bad DC’s

Your finances are a huge part of your life, so you should not be lazy when choosing a partner to help you with your debt burden. Do your homework.  Bigger is not always better. Some might feel comfortable with a bigger DC company because they prefer safety in numbers, while other consumers might want a smaller DC company because they prefer a more personal touch. Don’t paint every debt counsellor with the same tainted brush, by going on something that “you heard”

Take the time to do your research, ask around in the industry, and, ultimately, make an informed choice that will benefit you and your family.

To assist consumers looking for help managing their debt, the National Debt Counselling Association has put together the following checklist. It’s designed to reassure consumers, prevent them from being taken in by conmen, and help them find a reputable debt counselling company.

Check the number

Debt counsellors can and do phone consumers to offer their services. Unfortunately, scammers and conmen offering financial services also use phone calls to try to take advantage of vulnerable people.

If you do get a cold call, ask for the number if it isn’t displayed on your phone and tell the caller you’ll call back. That will give you time to Google the number—or use an app such as Trucaller—and check if the caller is who they say they are and from the company they claim to represent.

Ask if you can visit their premises

Whether you get a call or are proactively looking for a debt counsellor, ask where their offices are. Reputable debt counsellors will have formal premises. Ask for the address and whether you can visit the offices if they’re located near you. This will help sort genuine debt counsellors from the chancers.

Ask which payment distribution agency (PDA) they use

By law, debt counsellors cannot take payments directly from creditors for debt counselling purposes. They have to work through a payment distribution agency (PDA). Four PDAs are registered with the National Credit Regulator (NCR): CollectNet, DC Partner, Hyphen, and Intuitive. Ask the debt counsellor which PDA they use. If a caller says you can make direct payments to them rather than a PDA, don’t even continue to talk to them.

Ask for the debt counsellor’s National Credit Regulator 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 actual registration number. You can verify their details in the NCR website: www.ncr.org.za/register_of_registrants/index.html

Ask which professional debt counselling association they belong to

Ask if the company belongs to a professional body or association, which ensures its members adhere to industry standards. Often the membership is displayed on the debt counsellor’s website.

Industry associations such as the NDCA and DCASA exist to improve service standards. If the debt counsellor does not belong to a professional association, this extra layer of protection does not exist.

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 may have. You can check what they tell you on the NDCA website www.ndca.org.za/how-debt-counselling-works/  or those of other professional bodies. The NDCA site also includes a list of commonly asked questions.

A reputable company should be able to  tell you how long the process typically takes – between three and five years – and that during that time you will not be able to access credit

They should also be able to tell you what support framework – telephone number, email address, client service resources etc – are 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 done over the ‘phone, as most consumers prefer the anonymity and convenience of a call. If you prefer, it can also be done in person. 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.

Good debt counsellors will conduct a thorough financial assessment, examining all aspects of your finances and ability to repay your debt.

Make the effort and do your research when choosing a debt counsellor. It can only stand you, your family and your finances in good stead.

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