Debt Counselling

It is crucial to consider whether it is the right time
for you to consider formal Debt Counselling.

If you in all honesty if you cannot pay your debts or your
credit providers want to hand you over for legal collection,
now is the time to take these steps.

Once you have received a Section 129 letter of demand from
a credit provider, you will have ten days within which to
either contact the credit provider to make repayment arrangements,
or consult with a debt counsellor.

It is advisable to first attempt to enter into a payment
arrangement with your credit provider, as this will save
you the cost of the debt counselling fees.

If, however, you are unable to come to an arrangement with your
credit provider, or you have reached a state of over indebtedness
from which you are not able to escape, it is time for you to
consult with a debt counsellor.

Once you have successfully applied to be placed under debt review,
your Debt Counsellor will negotiate reduced monthly instalments
with all your credit providers in order to allow you to survive
more effectively on your monthly income.

Once all the outstanding obligations under the credit agreements
which have been included in the debt review process have been
settled in full, your debt counsellor will issue you with a
Clearance Certificate.

It is important to commit to the process and satisfy all the
debt due and owing by you to allow you to re-enter the main
credit market stream and resume your financial affairs independently.

While under debt review, you will be barred from applying for
further credit until such time as a Clearance Certificate has been issued.
You will also not be allowed to incur any further charges on
your store cards and credit cards.

The fact that you are under debt review will be reflected
on your credit report, which will alert credit providers to the fact.
This provision was written into the National Credit Act in order
to protect already over indebted consumers from acquiring
further debilitating credit.

Do not ignore calls and letters from your credit providers!
If you do not make contact with a credit provider,
or consult with a debt counsellor within ten days of receiving
a Section 129 letter of demand, the credit provider is legally entitled
to take legal action against you for the recovery of outstanding amounts.

A successful application for debt review has the effect of
barring credit providers from taking legal action against you.
Such legal action will be reflected on your credit profile
and the cost of the debt will be inflated with the
credit provider’s legal fees for which you will be liable.

If a credit provider has however already instituted
legal action against you prior to the application for debt review,
the action will be allowed to run.
Any payment orders, such as emolument attachment orders,
made under a judgment or an administration order
will also be allowed to continue.

What to expect from the process

Step 1

Find Out If You Qualify For Debt Counselling
Click Here To Complete our Online Enquiry

Step 2

A Registered Debt Counsellor with the National Credit Regulator,
Will then contact you.
The debt counsellor will charge you an initial application fee
of R50.00 (Note that further fees will apply as explained by your debt counsellor)

The debt counsellor will assist you in completing an
application form (NCR prescribed Form 16),
which is a detailed list of your income and expenditure.
In order to facilitate the ease of the process, ensure that
you take your identity document, recent bank statements,
copies of all agreements under which you have a
payment commitment (credit and service providers),
as well as details of any payments that you are making
in terms of judgments taken against you.

Your debt counsellor can only assist you if he is able to
truthfully declare you to be over indebted.
It is therefore imperative that you be open and honest with
him/her regarding all aspects of your financial difficulties.

Best practice is to let your debt counsellor have documented
evidence of all possible avenue of income, such as your salary,
maintenance, alimony, commission, bonuses and possible
rental income from a second property.

The same exercise is to be done in terms of your expenditure.
Compile an exhaustive expenditure list, including items such as
household expenditure, petrol, school fees, credit agreements,
service providers and school fees.

Step 3

The debt counsellor will then within five days of the date of your
application forward a Form 17.1 to all credit bureaux and affected
credit providers, notifying them of your application for debt review.
The credit bureaux will then reflect the fact that you have
applied for debt review on your credit profile.

The debt counsellor will then verify all the information contained
in your completed Form 16 with the various credit providers,
service providers, your bank and your employer.

Once the information has been verified, the debt counsellor will
be in a position to make a determination as to whether or not you
are over indebted. Your entire financial portfolio in terms of
income and expenditure will be taken into account.

The debt counsellor will also consider items relating to your expenditure
that may be deemed as luxurious spending, such as leisure club memberships.

The debt counsellor may make one of the following determinations:

Not over-indebted and unlikely to experience difficulty with repayment,
therefore not in need of debt counselling. The case is rejected.
Not over-indebted but likely to experience difficulty with repayment,
therefore in need of debt counselling. The case is accepted.
Over-indebted and in need of debt counselling. The case is accepted.

If the debt counsellor does not find you to be over indebted,
he will issue you with a letter of rejection.
This letter will reflect the calculations upon which he based
his decision and it will also advise you that you have the right
to apply to an alternate debt counsellor, the National Credit Regulator
or the Magistrate’s Court for an order that you are in
actual fact over indebted.

The debt counsellor will also notify all registered credit bureaux
and the affected credit providers that your application has been rejected.
You will no longer be barred from applying for credit, or
incurring charges under existing credit facilities and credit providers
will be allowed to institute any contemplated legal action against you.

If the debt counsellor finds you to be over indebted,
he will notify all registered credit bureaux and
affected credit providers of that fact.

Step 4

Your debt counsellor will now negotiate revised
payment terms with your credit providers.
The standard process is to extend the payment terms and reduce
the monthly payment amounts. In extreme cases,
the debt counsellor may attempt to negotiate a
payment holiday for a fixed period.

Your debt counsellor will also investigate your credit agreements
for any instances of reckless lending or illegal contract provisions.

Step 5

Once your debt counsellor has successfully negotiated
amended payment terms with your credit providers,
your debt counsellor will advise you on the method of payment.

Most debt counsellors make use of a payment distribution agency
that distributes the amounts due to the various credit providers
from your salary to each credit provider.

Step 6

Once all your obligations under all the credit agreements included
in the debt restructuring plan have been settled in full,
your debt counsellor will issue you with a Clearance Certificate.
The fact that you were under debt review will be removed from the
credit bureau and you will once again enter the main stream credit market.

It is extremely important that you not renege on any payments due under
the revised payment schedule. Credit providers are allowed to terminate
the agreement reached under the debt review in the event that you do not
adhere to the payment plan and skip payments. Such a termination will
allow the credit provider to institute legal action against you.

There is always light and relief at the end of the tunnel.

Useful Tips To Always remember:

Create a realistic budget
Include EVERYTHING that you are liable for
Do not lie to yourself
Pay your accounts on time
Do not over extend your budget
Get help as soon as you realise you are in trouble
DO NOT IGNORE your creditors
Be honest with your debt counsellor

If you would like more information on Debt Counselling
Then Click Here To Complete A Prelimanary No Obligation Enquiry