Many Benefits
Under debt review, you have legal protection from being harassed by your creditors. They should not contact and pester you or be able to repossess your assets. You will enjoy peace of mind, while your debt is being taken care of responsibly and your assets protected.
‘While under debt review, consumers are not able to make new debt and thus get themselves even further into trouble’
While under debt review, consumers are not able to make new debt and thus get themselves even further into trouble. This helps ensure that the existing debt gets paid off in the shortest possible time rather than consumers getting trapped in a cycle of taking on more and more debt to pay existing debt. While more debt is bad, paying off debt through debt review is good. Debt review can give you a chance to significantly improve your financial situation within a short period of time. It also allows you to work together as a couple to improve your income situation without all the stress of worrying about unpaid debt and pending legal action. Another benefit is that once you have completed the debt review process, no one will know that you were under debt review, and you will have a clean credit record. At the end of the process, Debt Counsellors issue you with a clearance certificate showing that you are no longer over-indebted. Finally, you can start a debt free future.
As a couple, it is important to work together to deal with your finances and tackle any growing debt head on rather than hide debt from one another. Good team work and the right assistance when needed can help make sure money woes do not threaten your relationship.
A consumer under debt counselling, can only be cleared or exit debt counselling if the following
has occurred:
• If all debts that have been subject to the debt counselling restructuring order have
been paid up in full; or
• If all short term debts have been paid up in full and the only remaining debt is a home loan account which is up to date in terms of the debt counselling restructuring order.
After verifying all the paid up letters, a DC will issue a clearance certificate and inform the credit bureaus to remove the debt counselling flag and expunge all information relating to consumer’s debts which were under debt counselling.
The debt counselling service is not offered for free and there are fees applicable, however
consumers do not have to borrow money to make payment for debt counselling fees.
Click here to view the DC fees
Civil Marriage
If you are married in Community of Property (COP) or bounded to a traditional indigenous customary marriage, both of you would have to apply for debt counselling and follow the process together (joint application), irrespective whether or not, both of you are over-indebted. According to the law, when married in community of property, you are classified as one single joint estate and all your assets and debts are deemed as one estate and both of you to be jointly responsible to address global monthly repayment as per restructured agreement, payable to the affiliated PDA.
If you are married with an antenuptial contract established, both of you are not obligated to apply for debt review unless you prefer to do. Regardless your choice, joint monthly household income of spouses to be taken into account when the DC assesses your financial state of affairs in order to affect a restructured debt payment plan. Should you be confronted with debt where both of you have signed the credit agreement, it may be worth considering, applying both in order to qualify for large debt such as a home loan.
The debt review process could still affect you even if it is technically only your partner who is overindebted and cannot afford to repay their debts each month.
Your Debt Counsellor will be able to guide you both through what the best course of action is whether to both apply or if only one should apply and get the benefits.
Regardless of gender couple to form a civil partnership as per The Civil Union Act 2006 (Act No. 17 of 2006). These couples are entitled to the same rights as those as per civil marriage.
This type of marriage generally refers and deals with indigenous customary marriages and is deemed to be similar than COP when entering into the debt review process.
FAQ'S
Debt Counselling is a debt management solution regulated by the National Credit Act with the core purpose to assist over-indebted consumers by guiding them out of debt by negotiating new terms (most of the time, more favourable) with credit providers on behalf of the over-indebted consumer and this process not to be mixed up with Debt Consolidation. This process offers legal protection against your credit providers.
This process pertains to the consolidation of all your debt by applying for a new loan at participating lenders to cover all your debt resulting in one global monthly payment instead of multiple separate obligations. This is an option only to consider should the consumer be able to sustain the new monthly repayment which normally is calculated at a steep interest rate which can worsen should interest rate soar.
Should you battle to address monthly creditor instalment and/or even using credit to sustain your monthly budget, debt review would be an excellent option to approach.
Debt Counsellors are trained and registered with the NCR Registered Debt Counsellor and will guide you through this process by negotiating affordable repayment terms with your creditors on your behalf. No more scary calls or intimidation.
A minute initiation fee of R50.00 + Vat at time of application (Form 16 submission) and a subsequent payment of R300.00 + Vat due once your application has been accepted or declined (over-indebtedness assessment). All other related payments for services rendered by the Debt Counsellor will be handled by an accredited and affiliated Payment Distribution Agency (PDA). Accredited PDA as per NCR guidelines Debt Counselling Fee Guidelines
Once you, no longer able to pay monthly minimum payments to your creditors, you would qualify for this process as you would then be over-indebted.
The Debt Counsellor to assist by drafting you a household budget that would enable you to proceed with life while enjoying the benefit of newly negotiated terms with creditors which aim to settle unsecure debt in 60 months let alone home repayment concession.
Any over-indebted consumer can apply. The sooner the better or else creditors can initiate legal action against you, prohibiting the Debt Counsellor to include that specific account under the debt review process. Should this scenario arise, that specific creditor can still take steps against you even though you are under debt review. The golden rule is “don’t delay”.
Should you be married within community of property (C.O.P) both parties have to apply.
Your debt counsellor will forward your monthly reworked payment plan to the appointed PDA who will then oversee payments to all listed creditors. Your Debt Counsellor will instruct you to transfer a global payment (what you can afford) to a trust account at the PDA from where your payment will be allocated by means of your ID number. You will receive monthly proof of payment.
This solely depends on the magnitude of your credit obligations in total. Unsecured debt to solve over a maximum period of 60 months or less depending on your affordability profile.
Unfortunately, you would not be able to apply as you have to pay your creditors a reasonable amount or else you would never be debt-free.
No, the NCA prohibits you to incur any further credit once you have applied for debt review. Debt Review core purpose is to guide you out of debt.
Your application will be dealt with in private and confidential manner at all times.
You could still contact us. We could attempt convincing the creditor to consent being part of the debt review process. However, this is not a given and all cases will differ depending on merit.
No, your record will only reflect that you are under debt review preventing you to incur further credit. Once you have settled your debt, we will furnish you with a clearance certificate and will inform the NCR and other related parties. Once done, your status will be
restored to the good, in full.
You would end up, blacklisted!!
Debt Collection is a step of procedures your creditor(s) will initiate should you not pay your debt within time frame as mutually agreed per credit agreement.
Please do act pro-actively by contacting us when you sense that you could no longer manage all credit obligations in a timely manner or else your creditworthiness to be at stake.
The creditor will send you a demand or will call you should not have paid or in the event where you have paid less than the minimum payment required. Should you still ignore, the creditor will enrol a legal process to collect. Some creditors have their own internal debt collecting departments while others outsource their debt collection to independent debt collecting firms. The debt collecting department will send you an official notification, referring to section 129 of the New Credit Act. This notification will recommend, you approach a debt counsellor or any alternative debt mediation or dispute resolution agent such as the Ombudsman or Consumer Court to find a feasible solution for your overindebted situation. Should you not respond by contacting the creditor within 10 working days from date of notification, the creditor will employ a range of steps enabling them to collect the debt you are owing them. Important to know:
Should you not respond to this correctly delivered notification within a certain time frame reflected on the notification, the legal team of your creditor will approach the court and summons will be issued against you. This summons will not only reflect your accumulating debt but also interest and other costs such as debt collection costs etc. At this point of time your only option would be to approach an attorney (Legal cost implication) that could oppose the summons in court within 10 days or liaise with the creditor’s legal team to settle out of court
Should you omit to react to this summons, the creditor will approach the court once more in obtaining judgment against you. At this point you will be blacklisted as a poor payer on all credit bureaus and the creditor would now be able to exploit various routes to collect what you are owing them, including all accumulating costs such as legal fees etc.
The creditor can now employ execution steps against you. Under South African law, the creditor can firstly attach moveable assets, thereafter immovable assets (your home), thereafter a part of your monthly income “Garnishee order” and/or money owed to you (for example: surrender value of insurance policies or an investment that you may have at a financial institution). Should your creditor not succeed in collecting your debt by means of these routes, the creditor can summons you as debtor to appear in court (Section 65A(1) application) upon which a detailed financial enquiry will be held. The court will then make an order that you pay the creditor a certain amount of money per month, till you debt is settled in full.
Interest, collection costs, legal fees etc. will be added to your initial debt and could well amount to staggering figures.
Interest, collection costs, legal fees etc. will be added to your initial debt and could well amount to staggering figures.
We are confident that you would agree, that you have to avoid formal debt collection at all times or else you could end up with no assets while you still have to attend to shortfall payments as your assets would most likely been sold for less than your total debt. Contact us, as soon as you detect that you could no longer sustain timeous monthly payments and let us assist , by liaising with your creditors on your behalf .
Prescribed Debt
- According to the NCA, the prescription period for most credit agreements is three years.
- This means that if a consumer has not acknowledged the debt or made any payments towards it for a continuous period of three years, the debt becomes prescribed.
- Mortgage bonds, which are used to finance the purchase of immovable property (homes), have a longer prescription period.
- The prescription period for mortgage bonds is 30 years. This means that creditors have 30 years from the date of the debt becoming due to collect the debt.
- When a creditor obtains a judgment against a consumer through the court, the prescription period for that judgment debt is also longer.
- The prescription period for judgment debt is 30 years.
- The prescription period for tax-related debts can vary depending on the specific tax law and regulations.
- It’s important to consult the relevant tax legislation to determine the prescription period for tax debts.
- If a consumer acknowledges the debt or makes a partial payment towards the debt, the prescription clock is reset.
- The prescription period will start running from the date of the most recent acknowledgment or payment.
- If a debt becomes prescribed, the creditor cannot take legal action to collect the debt through the courts.
- The consumer can raise prescription as a defence if the creditor attempts to enforce the debt after it has prescribed.
- The NCA requires credit providers to send a written notice, known as a Section 126 notice, to consumers whose debts may have prescribed.
- This notice informs the consumer that the debt may be prescribed and advises them of their rights and options.
- Prescribed debt can still appear on a consumer’s credit report even after the prescription period has passed.
- Credit bureaus might retain records of prescribed debts for a certain period, which could impact the consumer’s credit score.
- Debt Counsellors can help consumers manage their overall debt situation, including prescribed debts.