What can she do about this? Is insolvency the way to go? She has just started working and is terrified that the debt collectors will contact her employer and obtain a garnishing order on her salary.

Answer:
Generally insolvency is not the way to go and, ironically, it can be an expensive process. It appears that she would benefit from debt counselling.

The only way a creditor can put a garnishee order on her salary is if she gets a summons to appear in court and the judge awards the garnishee order. So, if she has not reached that point she is safe for now. However, if she continues avoiding her creditors it will eventually get to that stage.

It will give her short term respite.

The debt counsellor will give her forms to fill out and, based on the information he or she receives, propose a recommendation. The counsellor will then contact all her creditors to inform them that she is in a programme and they will not be allowed to call her again. Her debt will be rescheduled over a longer period so that her repayments are reduced. In the long term she will end up paying more but at least it will give her short term respite.

She should eliminate all unnecessary spending and try to free up cash to pay off the bills as soon as possible. She will not be permitted to apply for credit when under counselling and it will have an adverse effect on her credit rating. But this is better than having to deal with judgements and garnishee orders.

She can log onto www.ncr.org.za to find a counsellor in her area.

Fees vary, so choose a counsellor on normal commercial grounds.

There is a R50 application fee, but no limit on what a debt counsellor can charge for the other work, aside from taking on the case. As a result debt counsellors charge different amounts and the public must choose between them on normal commercial grounds. The National Credit Regulator (NCR) believes that some debt counsellors will provide more than others and be able to justify higher fees.

That said the NCR is in the process of trying to standardise debt counselling fees as some debt counsellors are seen to be making too much money in the process and sometimes do very little for their fee.

From what I understand, the NCR aims to limit these fees to a maximum of no more than R3420, including VAT, for the entire debt counselling procedure. The NCR is also introducing a means test in terms of which debt counselling fees would be paid by the NCR where the consumer falls below the set income.

These initiatives are likely to become binding on debt counsellors within the next month or so. The proposals have been largely accepted by debt counsellors and will become part of their conditions of registration.