Consumers should only approach a debt counsellor if they are unable to get help from their major credit providers or banks, the National Credit Regulator (NCR) said on Thursday.

"Consumers are advised that if they apply for debt counselling they may not get any further credit until their debts have been repaid... it is therefore advisable to contact your credit provider first to try and resolve your problems," the NCR said.

If a consumer was earning below R2500 a month, debt counselling would be paid for by a fund set up by the NCR.

If the consumer earned more than R2500, he would have to pay the debt counsellor — however, the counsellor had to disclose the fees upfront, the NCR added.

"You have the right to negotiate this fee. Exercise this right... In most instances there is more than one debt counsellor in your area and you have choice ... Use this as a negotiating tool."

The NCR said that if a debt counsellor insisted on charging exorbitant fees, the consumer had the right to approach another one.

"Make sure that you get a copy of the agreement setting out fees for future reference," the NCR said.

On 1 June 2007, debt counselling services became available to consumers unable to honour credit agreements to which they were party in a timely manner.

Debt counsellors cannot be part of organisations that provide credit, debt collection agencies or credit bureaus.

In a bid to curb the exploitation of consumers, the NCR had agreed to guidelines proposed by the Debt Counsellors' Association of South Africa, together with other debt counsellors.

The guidelines were an interim measure aimed at setting maximum fees that debt counsellors may charge in order to limit exploitation of over-indebted consumers, pending the finalisation of the fee regulations by the Department of Trade and Industry.

Sapa