Debt Counselling Glossary


A listing on an individual’s Credit Report stating his/her unfavourable credit history.

An estimate of income and expenditure for a set period of time.

A borrower is a person who receives funds in the form of a loan. The borrower is responsible for the repayment of the funds over a set period of time.

Clearance Certificate
A document issued by a debt counsellor stating that all the consumer’s debts have been settled as per their debt repayment plan.

Collateral (or Security)
Personal property pledged as a guarantee that you will repay your loan. Property such as houses, cars, savings accounts, bonds, or certificates of deposit are commonly used as collateral.

An agreement (subject to certain terms and conditions) to buy now and pay later.

Credit Agencies/Credit Bureaus
Organisations that collect individual consumer credit information and provide Credit Reports to potential lenders, employers, landlords, etc., for purposes of aiding in their decision-making process.

Credit Card
A plastic card allowing the consumer to make purchases on credit.

A person or company to whom money is owed.

Credit Provider
A registered financial institution that allows consumers to borrow money from them.

Credit Report
A Credit Report is a confidential report that details your borrowing and repayment history and provides insight into your current credit status.

An amount owed for money borrowed. The debt may be owed to individuals, banks, or other financial services providers.

Debt Administration
If a debtor is struggling to make their monthly repayments, a debt administrator (attorney) can apply to the court to extend the loan term. The debt administrator will then determine the money needed for the debtor's basic needs while the rest of the money will be used to pay off their debts. These payments often become a salary deduction in order to ensure that the debts are paid.

Debt Consolidation
Debt consolidation is when a debtor takes out one loan to pay off other smaller loans or debts.

Debt Counselling/Review
Debt Counselling/debt review is a formal legal process where a consumer is declared over-indebted. A debt counsellor then compiles a restructured payment plan and obtains a court order confirming the new repayment plan. Debt Counselling is a debt solution that helps consumers with their monthly debt repayments.

Debt Counsellor
A debt counsellor is a person that is qualified by and registered with the National Credit Regulator. A debt counsellor offers assistance and advice to over-indebted consumers.

A debtor is an individual or company that owes money.

Debt Repayment Plan
A strategy developed by a debt counsellor in order to help consumers with their monthly debt repayments.

Default occurs when a debtor fails to make the necessary repayments on a loan.

Home Loan
A home loan refers to when a bank or other financial institution grants credit to a person to assist in buying a house or apartment.

A debtor will be declared insolvent when he has insufficient funds and is no longer able to pay his debts. Assets may be liquidated to pay off outstanding debts.

The amount due to the financial institution to repay the initial loan which consists of capital and interest.

Interest Rate
A charge for money borrowed generally stated as a percentage of the amount borrowed.

Loan/Credit Agreement
A formal document that sets out the rights and obligations of the lender and the borrower.

Late Payment
A payment that was not made by the stipulated due date. If the payment is late by 30 days or more, it may be reported to the credit bureaus.

Married in Community of Property
In South Africa, if a couple gets married without having an antenuptial contract in place, they will automatically be married in community of property. This means that all of their assets and liabilities are merged into a single estate. The couple will then share everything they earn, including any debts and liabilities.

National Credit Regulator
The National Credit Regulator (NCR) is responsible for the regulation of the credit industry in South Africa. The NCR ensures that credit providers, credit bureaus and debt counsellors comply with the National Credit Act.

Outstanding Debt
The amount owed on a debt or loan. For example, if you borrow R10 000 and paid back R2 000, the outstanding debt is R8 000. The outstanding debt may also include interest accrued on the balance.

An arrangement with a bank allowing you to withdraw more money than the account holds.

A consumer is over-indebted if they are unable to pay their financial obligations as agreed in a credit agreement. This usually occurs when a consumer, after deducting living expenses from their nett salary, has little to no money left to pay their monthly instalments.

Payment Distribution Agency (PDA)
A payment distribution agency (PDA) distributes a consumer’s monthly debt repayments to their creditors.

Personal Loan
A Personal Loan is a financial contract in which one party borrows a specific amount of money from another party that is to be paid back over an agreed upon period of time. It is a type of loan that can be used when experiencing long- or short-term cash flow problems.

Reckless Credit
Reckless credit refers to when a creditor approves a consumer’s request for credit even though the creditor knows that the consumer cannot repay the debt.

When a debtor can no longer fulfil his obligations towards his monthly repayments, he can be forced to sell his personal assets. These assets can be sold in order to pay off or lessen his debts. Sequestration can be a lengthy and expensive process.

Vehicle Finance
Vehicle Finance refers to when a bank or other financial institution grants credit to a person to assist in buying a vehicle.

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