Debt Counselling
1. What Is Debt Counselling? Show
2. Things I Need To Know Show
3. Consumer Check List While Under Debt Review Show
4. How To Find A Debt Counsellor Show
5. Too Late For Debt Review Show
6. Specialist Attorneys For Debt Review Show


What Is Debt Counselling?

Debt Counselling was set up by Government in June 2007 as it recognised the amount of people that could no longer afford to pay their debt were increasing at alarming numbers. It also recognised that the credit providers were not doing financial based assessments on income after deductions taking living expenses and debt into consideration, but rather on the gross amount before any deductions, living expenses and existing debt. What this meant for many consumers, was that they were taking out credit far beyond what they could afford.

In June 2007 the National Credit Act came into effect as a new law. NCR Registered Debt Counsellors work according to the National Credit Act and are governed by the National Credit Regulator.

Debt Counselling is a process that helps consumers who cannot afford to pay their normal monthly debts, while protecting them under the National Credit Act. Debt Counselling is not a free holiday from paying your debt, but rather a more structured way to help consumers pay their debt, while still being able to have money for necessary living expenses. This needs to be done in a fair and reasonable manner both towards the consumer and the credit provider.

You cannot expect your credit providers to accept lesser monthly payments, while you continue to enjoy your weekly sun beds, luxury holidays or monthly entertainment. The courts will not entertain a continued lifestyle, while your creditors are forced to cut from their side.

To be placed under debt counselling means that you must be financially assessed by a registered debt counsellor. Debt Counsellors must always display their NCRDC number on all formal documentation.

Debt Counselling is for consumers who are employed, who have integrity to pay their creditors on a monthly basis and who have a desire to help themselves get out of their financial stress - You need to be willing to make cuts and allowances, to accommodate a new lifestyle. Being placed under debt review means that your debt is restructured - it does not disappear.

The debt counselling industry is there to assist you in finding solutions in paying your creditors. This does not include paying off a debt for 80 - 100 years ! Debt Review is not a free bond holiday and there is no guarantee that the debt counsellor can get your monthly debt repayments reduced by 30% or more. Consumers should be wary of any debt counsellor advocating this to be the truth.

The success of the debt counselling industry stems from consumers understanding their rights and then enforcing them with the help of specialists, such as debt counsellors.



Things I Need To Know

1.
Commitment To The Process

You need to be committed to the programme and understand that there are still many annoying factors and tactics that creditors use. This process is not perfect and is still in an infancy stage.

Without the need and desire to want to help yourself, no debt counsellor will be able to assist you. Admit certain financial mistakes, learn how to correct them by cutting down on living expenses, learn how to live on cash.

Acknowledge responsibility and take accountability; it is YOUR debt and not your debt counsellors.

This process is for consumers who want to pay their debt but cannot afford to. You need to stick to your payment plan without fail. The first breach in your payment plan is immediate termination under the latest judgment that was delivered on 27 May 2011.

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2.
Choosing Your Debt Counsellor

Choose the right debt counsellor that you can work with. You need to trust your Debt Counsellor and understand that this is not just a service but a relationship. Like any relationship, it has to work both ways. You need to be upfront and 100% honest with your Debt Counsellor. If problems arise, you need to be pro active and communicate with your debt counsellor's office immediately. No debt counsellor can determine the percentage reduction in a consumer's debt repayment until they have been interviewed by the debt counsellor.

Consumers should not forget that when they appoint a debt counsellor, they are placing their homes and cars into hands of people that they need to work with and trust.

It is always best to meet with your debt counsellor prior to making a commitment into using their services.

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3.
Bigger v.s Smaller Debt Counsellors

Smaller DC's have fewer clients; can offer a more personalised service; are easier to speak with directly and often have the time to go the extra mile; you would generally get to meet and know your DC. They usually work from a small office or home with no or minimal signage which can offer a more private feel.

Bigger DC's have more clients and therefore more admin staff to assist applications and admin duties; usually have in-house, national attorneys; can offer National representation; do more online applications than personal interviews; at times, it is more difficult to speak directly with the DC. Normally have big office space with highly visible signage.

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4.
Creditor Providers Debt Review Departments

In most cases, these departments are separated from the rest of the other divisions. This means that the debt review systems are also separated from their "normal" systems. This makes systems and internal processors far from perfect.

Some creditors have massive problems in capturing data; liaising and pulling through information from the various product divisions; information is disparate and often differs from your debt counsellor's information.

Even after a court order is obtained in the debt review matter, creditors can take longer than 6 months to update their systems and your statements, as per the court order.

This internal separation also makes for all those late night call centre calls, or harassing phone calls more than 3 times in one day. It also explains why, at times, your debt counsellor informs you of one thing, yet your creditors say something else.

Bigger credit providers have thousands of people working for them. The debt review departments rely on information from the various internal product divisions. When a problem / query arises, it normally takes the debt counsellor 5 - 10 business days to get a response because of the various internal divisions that need to give input back to the debt review division. Even then, sometimes the response times are not adhered too and it can take much longer to resolve.

There is often a breakdown in communication within these various divisions. This can cause disruption for any consumer. It is always best to advise your debt counsellor and place all requests in writing for future reference.

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5.
Your Debt Counsellor Is Human

Treat your debt counsellor with respect and dignity. A Debt Counsellors job is thankless and one that is bursting with daily frustrations beyond belief. They are consistently placed in high pressure and stressful situations in which they need to find resolutions or be faced with possibilities that often give them sleepless nights.

Be kind and work with your debt counsellor to get better results.

Never forget who owns the debt and who is trying to assist with restructuring the debt. It can never be the debt counsellor's fault for you being in a financial mess. It is only ever your fault, just as it can only ever be YOUR debt.

It is of utmost importance to have understanding for the events that occur at your debt counsellor's office. Along with all the many court issues, concerns and emails that they are flooded with on a daily basis, not to mention the continuous ringing of the telephones, you may begin to see why it can be difficult to get hold of debt counsellors themselves.

Most debt counsellors have assistants who have been specifically trained to help consumers. It is always a good idea to speak with the assistants, as often concerns, issues or queries can be sorted out immediately.

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6.
Payment Distribution Agencies (PDA's)

This selection is just as important as choosing your debt counsellor, as reliability and consistency is of utmost importance.

You must use one of the four PDA's and there is a cost involved.

You must also get monthly statements from your debt counsellors or PDA. Unfortunately, there are currently only two PDA's that are successful in helping consumers in receiving their monthly PDA reports.

This is your money and debt; know where your money is going and how it is being distributed towards your creditors.

By receiving your PDA reports, you can place a stop to any creditor calling you, informing you that your debt counsellor is stealing your money / or when they inform you that no payment has been received. After all, this is your debt and you need to keep tabs on your money.

Consumers must not pay their monthly rehabilitation fee into their debt counsellor's personal accounts.

It is always advisable to ask your debt counsellor for their PDA contact details so that you can do a check if required.

Some PDA's have trust accounts in the debt counsellors / business name. Only the debt counsellors clients pay into the trust account. Debt Counsellors do not have access to take money out of the PDA trust accounts; they can however view client's payments into the account online. Speak to your debt counsellor if you are unsure.

Make sure your debt counsellor is using an NCR accredited PDA.

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7.
The Induplim Rule

This rule is one of the most contested by credit providers. It has been challenged in the courts, including the highest court in South Africa.

This rule does not apply to any credit agreements prior to 2007.

This ruling simply means that from the day you were placed under debt review, your interest on your arrear amounts, may never exceed the outstanding capital owed to the credit provider. In other words, if you owed R1000.00 on an account, when the interest has increased to R1000.00 the debt and the interest stops running.

This rule is one of the most powerful for consumers within debt review, as it stops debts from spiralling out of control and helps the consumers to pay the debts back within reason.

All debt is included into this ruling, including bonds and vehicles.

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8.
The Prescription Rule

This rule is a saving point for many consumers if they only knew about it. This rule is very simple and one to always check when you suddenly get those unexpected phone calls on old debt that you had forgotten about from Attorney's, Collection Agents or even the creditor providers themselves. Before you admit to the debt, sign an Acknowledgment of Debt (AOD), make a payment arrangement or pay one single cent, remember that if you have not paid this debt for 3 years or longer and if there is no judgment against your name on this debt - this is a prescribed debt and this prescription rule ALWAYS applies without exception.

It is your right to inform the person calling you of this fact and to request a statement of the last 6 payments made against this debt. If they cannot send you proof thereof, it is because they do not have it. If they cannot prove to you that you have indeed paid within a 3 year period, the prescription rule applies.

However, should you be caught and make a payment towards this debt, even though it has prescribed, the debt becomes live and enforceable again.

Do not get caught on prescribed debts and always request proof of your last payment in writing should there be a disagreement in proving your case.

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9.
The Basic Debt Counselling Process
  1. Make an appointment with the Debt Counsellor. The consultation will take anything from 1 - 2 hours depending on the complexity of the case. This application can also be completed online with various debt counselling firms.

  2. You will need to take the following with you;

    • A copy of your ID.

    • Your latest payslip.

    • 3 months bank statements. If you are self employed 6 months bank statements.

    • Latest copy of your creditor statements.

    • All legal letter, summonses, demands.

  3. The Debt Counsellor will assess the situation, ask you to fill in the application form also known as form 16, discuss your budget and explain the process along with fees and legal implications.

  4. If you are over indebted, the debt counsellor will give an estimated amount of what you will need to pay monthly. This is known as your restructuring amount.

  5. Note that there are times when the budget will need to be cut again to accommodate creditors. You need to agree to a restructuring amount and be aware that it could change.

  6. The debt counsellor will then register you onto the NCR debt help system.

  7. Form 17.1 and or 17.2 will be sent out to all creditors within 5 days of applying for debt review.

  8. Creditors respond to the debt counsellor with certificate of balances (COB) within 10 days after 17.1 and or 17.2 being sent out.

  9. Budget is finalised and proposal sent out to creditors.

  10. Matter referred to court while the debt counsellor negotiates with the creditors.

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Consumer Check List While Under Debt Review

Debt Counsellors duties towards consumers

  1. Every consumer that applies for debt counselling, has the right for certain information to be disclosed and sent to them. Tick the below checklist to ensure your debt counsellor sends you the relevant documentation. This will help you keep track of where you are in the process.
  2. The debt counsellor or their office must always answer queries, concerns or related issues but do not have unrealistic expectations on timelines. It is normal practise to expect at least 5 - 10 business days for a response, as very often the debt counsellors are waiting on feedback from credit providers to answer many requests.
  3. In an emergency, your debt counsellor must always assist as best as possible and in the constraints of the Law.
  4. Debt Counsellors are seen to be friends of the courts - do not expect them to mislead, misrepresent or be untruthful to creditors on your behalf as this will not only jeopardise their position, but also yours with the credit providers.
  5. Good Faith from all sides is an enormous factor in the debt review process and when arguing matters in court.

Consumer duties towards debt counsellors

  1. Be honest and open about concerns and problems.
  2. Debt Counsellors are only as good as the communication they receive from consumers. It is always advisable to send your debt counsellor written requests on queries, concerns or other related issues.
  3. Understand your debt counsellor's perspective and that they play an unbiased role. In accordance with the National Credit Act, debt counsellors are required to remain fair, neutral and must act in good faith towards consumers and credit providers.
  4. Honour your payment arrangements. Do not default or make short payments as you can legally be terminated the first month this occurs.
  5. Payments into the PDA should always be the first on your list and the last place you ever cut from.
  6. Debt counsellors and creditors are not brainless - it is always amazing just how many consumers jeopardise their homes and cars as they feel it is their right to spend money they do not have over the Festive Season or on special occasions. It is very easy for all parties to see through the many excuses of cars breaking down, being robbed of the money that should have been paid into the PDA, sick aunts and uncles and family members that have already died a few times over the years!
  7. Your debt needs to be paid first. The debt always remains yours alone and it is your responsibility to ensure it gets paid.
  8. Be kind and respect the work the debt counsellor does for you. Make sure of your facts before sending threatening emails and harassing phone calls to their office or the NCR, especially if you have defaulted on your payment arrangements.

Consumer Checklist



How To Find A Debt Counsellor

theDCI can offer additional piece of mind to consumers looking for assistance from Registered Debt Counsellors . We maintain an existing database of all Registered Debt Counsellors, as well as Registered Debt Counsellors who are currently practising and accepting new clients onto their books.

As extra security measures for consumers, theDCI verifies all debt counsellors that register with us. There is no other site that can offer consumers guaranteed verification of practising debt counsellors.

theDCI stores the following verification details of all our listed debt counsellors;

  • The official NCR certificate that all Registered Debt Counsellors obtain from the National Credit Regulator.
  • A copy of the debt counsellors ID, proving that their ID number is the same as on their NCR certificate.
  • A copy of their latest renewal fees that must be paid to the National Credit Regulator annually, in order for them to continue to practise as debt counsellors.

Should you require assistance from a verified practising debt counsellor, follow the process below and three debt counsellors will contact you shortly.


Find A Debt Counsellor - Contact Form

If you would like a Debt Counsellor to contact you, whether it be for advice or to guide you through the debt counselling process, simply complete the form below and click "Send Request".

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Too Late For Debt Review

You need to take note of the below pointers to realise when it is just too late for debt review on either a specific account such as on your bond, or for all your debt to be included.

Debt review is the consumer's LAST option to try and restructure the debt.

The sooner you realise that it may be too late for debt review, the sooner you can move onto the next possible solutions, to ease your financial burden.

1.
No Income

You may only apply for debt review if you can prove to the courts, through bank statements and payslips that you do have an income. You may not apply for debt review if you have no income. Any debt counsellor taking on consumers with no income are doing so unethically and fraudulently.

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2.
Lost Employment While Under Debt Review

A short grace period can be arranged with the understanding that it would be a short term arrangement and that as soon as new employment is gained, the back payments would need to be repaid in full as well as the current monthly rehab into the PDA.

Should you not be able to gain employment within these few weeks, you would need to look at sequestration or liquidation as there would be no alternative option.

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3.
Cannot Keep Up With My Debt Review Repayments

If you are currently under debt review and for some reason, cannot keep up with the required repayments, you need to look at an alternative solution especially if you have assets such as bonds or vehicles.

This could mean that you would need to sell your home or vehicle to try and lessen your financial burden.

You have to accept that if you cannot afford your already lowered repayments, you have to sell your assets. This is fair towards your creditors and more importantly, towards yourself.

At times you need to get rid of everything, including your debt, to make way for a fresh new start.

It is pointless trying to hold onto something that you cannot afford, even under debt review. The stress could eventually exhaust you, make you sick or break you down to the extent that you feel you cannot carry on any longer. No house or car is worth your life.

The next best option would be to sell off assets or be placed under sequestration or liquidation. By taking this option, it means that you will have to sell all your assets including your home, car, and potentially some furniture.

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4.
I Have A Court Order In Place - Cannot Make The Required Repayments

If you have a court order in place for your debt review, and you can no longer afford the repayments, you would need to look at being placed under sequestration or liquidation if you cannot sell off the assets and settle the debt. By not complying with the court order, you are in contempt of court and the creditors can terminate with immediate effect.

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5.
A Letter Of Demand Also Known As A Section 129 Letter Has Been Sent

If you have received this letter prior to being placed under debt review, the account number stated on the letter will be excluded from debt review. The creditors are strict in issuing these letters especially for the bond and vehicle accounts. These letters are usually issued within the 3rd month that you have either defaulted or short paid on your normal bond payment.

These letters are always sent registered post and even if you do not pick up the letter from the post office, the legal side of the letter still stands in favour of the credit providers.

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6.
A Summons Has Been Issued

Gone are the days when debt counsellors could speak with the creditors and beg them to include the debt under debt review. If you have received a Summons prior to being placed under debt review, the debt on which the Summons has been served cannot be included.

However, if you or the debt counsellor can prove to the courts that the Summons was issued illegally, or in error, it would be a matter that can be addressed and resolved with the creditors.

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7.
Notice Of Attachment, Writ Of Execution, Auction Date

Any debt that has any of the above will be excluded from debt review without exception. If all your debt has either a section 129 letter or a summons or notice of attachment or writ of execution, it is too late to apply for debt review. Sequestration or liquidation would be your only option.

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Specialist Attorneys For Debt Review

The below attorneys are recommended by theDCI. These attorneys have a solid work ethic and integrity in assisting, representing and handling debt review and other related matters within the courts.