Debt Counsellor vs Debt Collector: Know the Difference

They work for opposite sides

A debt counsellor is registered with the National Credit Regulator and acts for you, the consumer. They assess whether you are over-indebted under section 86 of the National Credit Act and propose a re-arrangement of your obligations. Section 86(3)(b) of the Act says they may not require or accept a fee from a credit provider in respect of your application - their duty runs to you.

A debt collector recovers money on behalf of a creditor. Their job is to get you to pay. They are not assessing your affordability, they are not proposing anything to a court on your behalf, and they are not on your side of the table.

The names are similar enough that people in distress confuse them, and that confusion gets exploited.

How to tell which one you are dealing with

• Who is paying them? A debt counsellor is paid by you under the NCR fee guideline and may not take a fee from your credit providers. A debt collector is paid by the creditor.
• Are they on the NCR register of debt counsellors? Check: http://www.ncr.org.za/register_of_registrants/registered_dc.php
• What are they asking you to sign? A debt counsellor takes you through a Form 16 with a fee addendum. A collector wants an acknowledgement of debt or a payment arrangement.
• How did they find you? You approach a debt counsellor. A collector approaches you, usually after an account has fallen into arrears.
• What are they offering? Assessment and a proposed re-arrangement under a court order, versus settlement of a specific account.

Why it matters while you are under debt review

Section 88(3) restricts a credit provider that has received notice of your application from exercising or enforcing by litigation or other judicial process any right or security under that agreement, subject to sections 86(9) and (10) and to you not defaulting on the re-arrangement.

That is a restriction on enforcement through the courts. It is not a general prohibition on being contacted. So collection calls can continue to happen, and the correct response is not to negotiate a side deal - it is to refer the caller to your debt counsellor and tell your debt counsellor about the contact.

Never make a separate payment arrangement with a collector on an account that is inside your debt review without speaking to your debt counsellor first. It can disturb the plan and, in the worst case, put you in default on the re-arrangement, which is one of the events that lifts the section 88(3) protection.

If contact becomes harassment

Keep a log: date, time, number, who called, what was said. Refer the caller to your debt counsellor in writing.

Conduct by a credit provider or its agents can be raised with the National Credit Regulator on 0860 627 627 or complaints@ncr.org.za. If you are receiving actual legal documents rather than calls, that is different and more urgent - take them to your debt counsellor the same day.

Frequently asked questions

Related guides

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