Can Service Agreements be included under Debt Counselling?

Table of contents

What are service agreements?

When can service agreements be added under debt counselling?

What are service agreements?

A service agreement is an agreement between two persons or businesses where one agrees to provide a specific service to the other, it does not incur an interest rate like credit agreements.

In general, service agreements cannot be placed under debt counselling as no interest is being charged on the agreement. This includes but is not limited to, rental agreements, school fees, medical bills, insurances, cell phone contracts, etc.

When can service agreements be included under Debt Counselling?

There is one circumstance that will allow for a service agreement to be included under debt counselling:

• When a consumer defaults on a service agreement/misses a payment and the service agreement goes into arrears, should the Service Provider now implement an interest charge on the service agreement, that agreement then becomes Incidental Credit.
• As the service agreement now carries an interest charge, the agreement can be treated as a credit agreement and form part of the debt counselling process.