There are four ways to be rehabilitated
· Debt counseling
· Administration order
· Consolidation
· Sequestration
Debt Counseling
Definition of a Debt counsellor
A debt counsellor is anyone
who is authorised by legislation to offer assistance to consumers who have
debt-related problems
NCA sec 44 (2) A
person must not offer or engage in the services of a debt counselor in terms of
this Act, or hold themselves out to the public as being authorised to offer any
such service, unless that person is registered as such in terms of this Chapter
The main purpose of a Debt Counselor is to:
Ø Act as a mediator
between credit providers and indebted consumers.
Ø Assess a Consumers
state of indebtedness.
Ø Facilitate debt re-arrangement
with Credit Providers.
Ø Make recommendations
to Credit Providers and/or Magistrates Court on behalf of over indebted
consumers.
The overall objectives for the debt counselor
are:
Ø Assess
the full extent of the debt situation
Ø Assess
the consumers assets that may be taken into account
Ø Provide
a debt remedy that:
ü Provides
the consumer with an acceptable standard of living while repaying the debts –
this includes retaining the home and a vehicle where possible
ü Provides
the consumer with an agreed, affordable and realistic monthly budget in order
to resolve the situation in the shortest possible time
ü Provides
a repayment scheme acceptable to the consumers creditors
ü Provides
a repayment plan that resolves in the shortest possible time
ü Prevents
repossession of assets where possible
ü Rehabilitates
the consumer without detriment for the future
ü Allows
the consumer to get on with their lives
The overall objectives for the consumer should
be:
Ø To
work honestly and openly with the debt counselor
Ø Declare
all assets and liabilities – including all incomes and debts, and including
bonuses and salary increases
Ø To
pay the registration and mediation fees as disclosed at the first meeting
Ø To
keep in regular contact with the debt counselor for the full length of the
agreement
Ø To
agree and commit to the debt remedy – this may include surrendering credit
cards, closing accounts and releasing some assets
The overall objectives for the creditors
should be:
Ø To
work with the debt counselor to assist in the normalisation of the debt
Ø To
favourably consider the repayment proposal
Ø To
ensure the consumer is assisted in a fair and unbiased way throughout the
process of repayment
process of repayment
Ø To
assist the consumer to rehabilitate as soon as possible
To assist the consumer to
restore his/her credit worthiness as soon as possible
Documents required
when visiting a Debt Counselor if you are single or married in
Community of property
Before you visit the debt
counselor you will need to gather together the following documents:
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Ø Copy of your identity
document/passport
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Ø A copy of your most
recent salary/wage slip (If you receive overtime or allowances that are not
of a regular nature then the last 6 months are required to determine an
average)
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Ø A copy of the recent
creditor statements and credit cards
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Ø A copy of the last two
months bank statements for all your bank and investment accounts
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Ø A copy of the last two
months credit card statements for each of your cards
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Ø A copy of the latest
statement reflecting your home loan balance
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A copy of your
spouse/partner’s most recent salary/wage slip (if you receive overtime or allowances that are not of a regular
nature then the last 6 months’ are required to determine an average)
Example of how much you will pay for your Debt Review
If your house hold net
income is R10000pm and your running expense is R5000 pm and you need to pay
your creditors R8000pm
The debt counselor may
reduced the interest rate, extended the term of the debt and reduced your
monthly installment.
What the consumer needs to know and do
Ø Cancel your debit
orders with the credit provider or do stop payments by your bank
Ø Change your bank
account for your salary to go into to, preferably with a bank you have no
credit agreements with.
Ø I would suggest that a
stop order be implemented at your bank for your debt review payment instead
of debit order, a stop order is treated as cash and distributed to your
creditors immediately where as a debit order takes up to 15 days before it is
distributed to your creditors via the PDA.
Ø Do not skip payment on
your debt review as the creditors could terminate your debt review and take
legal action
Ø Always speak to your
debt counselor if you have problems
Ø Always answer your
phone if a creditor phones you, this will prolong legal action taking place
Ø There are no payment
holidays in debt counseling
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Important
Ø Once under debt review you only make one monthly payment each month (Payment distribution
agency).
Ø No monies
must be paid to debt counsellor only to a payment distribution agency
Ø All debt counselling fees must be paid from
the payment distribution agency –
normally the fee will be paid from the first payment
Ø By going the debt-counselling route you stand
a better chance down the line of
getting credit (Once paid all negative information regarding your credit
record is removed).
Ø A good debt counsellor should be able to give you advice as to how you can cut back on your costs.
Ø A consumer may elect
an insurer of their own choice – home owners & vehicle cover
Ø A consumer will be
entitled to access their credit record at the bureau once a year in the month
of their birth free of charge (R20 thereafter)
Ø Claim back costs
incurred when rectifying incorrect information held by the bureau
What
to ask for when dealing with a Debt Counsellor
Ø Ask for a copy of the NCR certificate or the
NCR number
Ø Phone the NCR 0860627627 to confirm if the
person is still registered
Ø Ask the Debt Counselor which attorneys they use and phone them
Ø Ask them what is their success rate for
obtaining consent orders in court
Ø If you deal with a call centre always request
to speak to the Debt Counselor if they don’t want to put you through to the
debt counselor go somewhere else
Ø Do not give your personal information over the
phone until you know the Debt Counselor is legit
Ø Find out if the Debt Counselor uses a Payment
Distribution Agent ,if not don’t use them
Ø Ask for copy of your receipt or a 17.1 that
you have applied for debt review
Ø NCA sec 44 (2) A person must not offer or engage in the services of
a debt counselor in terms of this Act, or hold themselves out to the public as
being authorised to offer any such service, unless that person is registered as
such in terms of this Chapter
Ø The two main acts to protect the consumer are National Credit Act NCA) and the Consumer Protection Act (CPA)
Ø There are two section that could apply to a
Debt Counselor in the CPA section 40 and 41
Unconscionable
conduct
CPA sec 40.
(1) A supplier or an agent of
the supplier must not use physical force against a consumer, coercion, undue
influence, pressure, duress or harassment, unfair tactics or any other similar
conduct, in connection with any—
(2) In
addition to any conduct contemplated in subsection (1), it is unconscionable
for a supplier knowingly to take advantage of the fact that a consumer was
substantially unable to protect the consumer’s own interests because of
physical or mental disability, illiteracy, ignorance, inability to understand
the language of an agreement, or any other similar factor.
False, misleading or deceptive representations
CPA sec41. (1) In relation to the marketing of any goods
or services, the supplier must not, by words or conduct—
(a)
directly
or indirectly express or imply a false, misleading or deceptive representation
concerning a material fact to a consumer;
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