This is a process that is intended to help restructure the debt obligations of consumers who cannot pay their debts, have judgements or do not qualify for debt counselling.

A repayment plan that is affordable to the consumer is developed and made an order of Court.

Debt counselling is a formal debt management process, whereby a debt counsellor arranges for you to pay lower monthly instalments and interest rates over an extended period of time. This provides you with immediate financial relief, so you can afford to pay off your debts and cover your basic living costs.

Advantages

1. Legal Protection from credit providers
2. Paying a reduced amount
3. No harassment from credit providers

Disadvantages

1. Cannot incur further debt
2. Consumer is liable for the fees of the debt counselor and attorney
3. Consumer cannot cancel from debt counselling whilst he/she is still over indebted

Over-indebtedness occurs when a consumer is unable to repay all financial obligations in a timely manner and/or where total debt repayments exceed net income (“take-home pay”) after living expenses have been paid for.