Bad Debtor Rehabilitation and Debt Counselling

Debt counselling is the process of assisting consumers who are over-indebted. This is done by providing legal advice and negotiation with relevant creditors to restructure debt while also offering valuable budgeting advice to avoid future debt.

Over-indebtedness can be defined as a consumer’s inability to pay debts in time or if the total debt exceeds the consumers income after expenses have been paid.

Debt rehabilitation and debt counselling

Debt counselling is a key component of the debt rehabilitation process.


Although anyone can apply for debt counselling, however, not everyone who applies will qualify. In order to qualify for debt counselling, you must be officially declared over-indebted.

This means that you are unable to pay the minimum instalments required by a creditor within the set deadline.


Debt rehabilitation takes place once you have been declared insolvent and the process of sequestration has already taken place.

Insolvency means that you are financially unfit to pay outstanding debts and this usually results in the repossession of your assets (sequestration).

The process of debt rehabilitation after sequestration will result in the High Court declaring the insolvent person once again worthy of applying for credit.

Consequently, this provides the consumer with a clean slate and an opportunity to start fresh with a restored credit history.

Therefore, having undergone debt counselling before rehabilitation, the previously insolvent consumer will have a better understanding and approach to accumulating unnecessary debt.

When can I apply?

According to the insolvency act, an insolvent consumer can apply for rehabilitation after 4 years since being sequestrated.

If the debtor does not apply for rehabilitation, he or she will automatically be rehabilitated after 10 years of being sequestrated.

Debt rehabilitation process

  1. After all relevant documents are received, a notice is issued in the Government Gazette. An affidavit is drafted and signed before a commissioner of oaths.
  2. A report is issued by the High Court in order to give permission to proceed with the rehabilitation application.
  3. An advocate will represent you on the issued court date to present the application.
  4. Once the court order has been received, it, along with any other relevant documents are sent to ITC and all other credit bureaus.
  5. If the process is successful, ITC’s policy is that 21 days after the documents are received, their systems are updated.

The results of this process are provisional and require full co-operation of the insolvent to ensure the smoothest possible progress.

There are many factors such as time-frames and policies that will have an affect on the rehabilitation process.

Additionally, there are certain relevant fees that are required to initiate and support the legal process to achieve debt rehabilitation.

Able Trac - Debt Collectors Port Elizabeth, South Africa

Able Trac provide debt collection services both nationally and internationally.

The aim of our monthly article is to provide our clients with educational, valuable information about debt collection, debtor rehabilitation and the industry.

Although we do not offer debt counselling, liquidations or sequestrations – it’s important that this information is accessible and presented in an easy to understand layout.

For more information about our debt collection, legal collection or tracing and investigation services, please contact us.

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