Debt Counselling - Living debt free

Kevin Russell Registered Debt Counsellor
NCR Reg Number NCRDC 384
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Debt Counselling is a process of assisting consumers that are experiencing debt review problems through:-

Budget advice;
• Restructuring their payments;
• Negotiating with credit providers on their behalf, and
• Monitoring their payments while
• Providing after-care services

Debt counselling is done by a debt counsellor. This is someone who is registered with the National Credit Regulator (NCR) and who assists consumers who are experiencing debt-related problems and are having difficulty making their current monthly payments by providing them with budget advice support and mediation with credit providers.

Debt Review process was introduced in 2007 with the National Credit Act (NCA). The benefit is that, while you’re getting debt counselling and in the process of paying off your debts, legal action can’t be taken against you.

Bear in mind that you can only take advantage of this process if you have a regular income to develop a reasonable repayment plan.

How Debt Review works:-

If you suspect that you are over-indebted or find that your expenses exceed your income, you can apply to a debt counsellor for debt counselling
An Assessment will be done of your financial situation, Form 16 application.  The Debt Counsellor will work out if you are over-indebted (if your payments are simply unaffordable on your current income).

If it is concluded that you are in fact over-indebted, the debt counsellor will inform the credit bureaus that you are under debt review where you won’t be able to access further debt, this is NOT like a blacklisting – it’s protection. It will be removed completely once you’ve paid off all the debts.

The credit providers are required to send information regarding your accounts including outstanding balances, interest rates and the monthly repayment.  Once all this information is at hand a repayment plan will be drawn up, work out how much you need to live on and what is available to repay debts.
A Debt Review application is a legal process that requires your full co-operation and participation at all times.

Debt Counselling Explained:-
 
 

A Debt Review application can be confusing to consumers at times as there is a lot of administration and specific time lines. Our expert accredited Debt Counsellor and Staff take the worry and frustration out of the process providing peace of mind to the consumer.
Step 1:-

Contact us to enquire, where our offices will supply you with the relevant Form 16 before we can proceed with the appointment all relevant documentation should accompany the consumer with the first eye-to-eye appointment, if married in community of property both parties should apply and documents are relevant to your spouse as well:
·        Copy of Identity Document;
·        Most recent Salary/Wage Slips (for the past 2 Months, 6 Months for commission earners)
·        Most recent creditor statements (for all creditors including doctors, water & lights, tax etc)
·        Last 2 months bank statements, of ALL bank accounts and investments
·        Most recent credit/shop card statements, for each credit/shop card, and the actual cards
·        All additional correspondences from credit providers, eg. Letter of demand, reminders
·        Statements reflecting your current home loan balance OR copy of rental agreement
·        Proof of residence, eg Water & Lights account OR Telkom Account
·        Copy of Marriage Certificate, if applicable
·        Copy of Divorce Order, if applicable
·        Proof of any legal action that may have been instituted against you
·        Copy of any court orders and/or garnishing orders granted against you.
Step 2:-

We advise your creditors and the Credit Bureaus of your application for debt review. This is a Form 17.1

Step 3:-

Your Credit Providers will also be requested to provide us with a Certificate of Balance (COB) in respect of your accounts.

Step 4:-

After receiving all the Certificate of Balances we now calculate whether you are over-indebted, in other words, do your monthly expenses exceed your monthly income? (You have to be over-indebted to qualify for Debt Review.)
Step 5:-

Now the Affordability Calculation is done. This will provisionally determine the amount which will be available to creditors.

Step 6:-

We will structure your payment plan and start negotiating with your Credit Providers. This is called a Form 17.2
(You will immediately start to pay a single provisional reduced monthly installment in respect of all your Credit Providers which will be affordable to you. During the first 60 working days, legal action may not be taken against you in respect of the debts that are under review.)

Step 7:-

The Credit Providers now have the chance to evaluate the Provisional Proposal.

Step 8:-

A Final Proposal is sent to the Credit Provider.

Step 9:-

Final Proposal is accepted or rejected by the Credit Providers.

Step 10:-

We formalize your debt restructuring proposal in the form of a Court Order . You will not have to appear in court yourself, as your Debt Counsellor will be the applicant in the matter, unless the particular magistrate requires your presence.

Step 11:-

After Care – We ensure your creditors stay happy and you are on your way to being totally debt free. Once you are free from debt, we issue a Clearance Certificate and you will have No credit record at ANY bureau!!!
What should I NOT do when under debt review?

Whilst under debt review it is important to stick to your repayment plan as skipping a debt review agreement payment will annul the agreement which will lead to termination of the debt review process from the credit providers as well as default under a court order.
You should not use your credit cards or apply for unsecured loans as this will put you at more risk.
The Debt Counsellor will inform you what the cost are after restructure of payments:-
 
·        An application fee
 
·        A rejection fee (to avoid frivolous applications)
 
·        A restructuring fee
 
·        A small monthly fee (aftercare)
 
·        A legal fee that is needed for the consent order in the second month; and
 
·        A clearance certificate fee when all debts are settled in full.
All of this MUST be explained to you thoroughly, and you MUST ask questions if you have any.
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 walways 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, neutra; and must act in good faith towards consumers and creditor 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 debts 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.
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. (see checklist Slide 1 and 2) This will help you keep track of where you are in the processs.

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 practice to expect at least 5 to 10 business days for a response, as very often the debt counsellor 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 contraints 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 matter in court.
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