Author: Yolande Schoültz

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THE 10 STEPS OF THE DEBT COUNSELLING PROCESS

STEP 1: The consumer makes an ENQUIRY with a registered debt counsellor

STEP 2: The consumer FORMALLY APPLIES with the registered debt counsellor for debt counselling

STEP 3: A notification is sent to all the credit providers of the consumer, informing them of the debt counselling application, and a CERTIFICATE OF BALANCE is requested

STEP 4: It is determined if the consumer is OVER-INDEBTED

STEP 5: A REPAYMENT PROPOSAL is sent to the consumer’s credit providers

STEP 6: The credit provider either ACCEPTS OR DECLINE the repayment proposal

STEP 7: APPLICATION to COURT is made by the debt counsellor as the applicant in the matter

STEP 8: The COURT HEARING and the COURT ORDER

STEP 9: The debt counsellor is responsible for the AFTERCARE of the consumer

STEP 10: A CLEARANCE CERTIFICATE is issued to the consumer when all debt is repaid

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DEBT COUNSELLING AND YOUR CREDIT RECORD

The question most often asked by clients is if they will be burdened for the rest of their life with the fact that they have been under debt counselling.

The answer is NO! Once you have successfully completed the debt counselling process and repaid your debt obligations, you will be issued with a clearance certificate and the fact that you were under debt counselling will be removed from your record.

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SECTION 129 LETTER

WHAT IS A SECTION 129 LETTER?

A Section 129 letter is a notice sent by a credit provider to a consumer who is in default of a credit agreement in terms of section 129(1)(a) of the National Credit Act 34 of 2005, before any legal action can be taken against the consumer.

WHAT SHOULD YOU DO WHEN YOU RECEIVE A SECTION 129 LETTER?

One of the options available to the consumer is to consult with a debt counsellor, should the consumer not be able to meet their monthly debt obligations timeously.

Other options available to the consumer is to refer the matter to an ombudsman with jurisdiction, an alternative dispute resolution agent or a consumer court in order to resolve the matter.

The consumer has 10 (ten) business days to respond to the notice.

Should the consumer fail to respond to the notice, as well as remain in default for a further 20 (twenty) business days, the credit provider can proceed with legal proceedings against the consumer.

This is a letter that the consumer should not ignore and seek immediate assistance.

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CLEARANCE CERTIFICATE

At the end of a successful debt review process, the debt counsellor will issue the consumer with a clearance certificate.

Within seven days of the clearance certificate being issued, the consumer’s name will be cleared with all registered credit bureaux.

For this reason, debt review is aimed at assisting the over-indebted consumer to pay all debts in structured manner, and should never be seen as something negative, but rather as a positive process available to the over-indebted consumer. 

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SINGLE MONTHLY PAYMENT AMOUNT

After the restructuring of your debts, you will pay a single monthly amount to the payment distribution agent, who will on your behalf distribute the monthly amounts due to your creditors.

This will ensure that you do not accidentally forget to pay a creditor, and it also takes away stress from you.

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WHO CAN APPLY FOR DEBT COUNSELLING?

Anyone can apply for debt counselling, whereafter a qualification process will follow.

It is important that the over-indebted consumer should have an income, in order to pay the renegotiated monthly installments towards the credit providers.

Should the over-indebted consumer be married in community of property, a joint application for debt counselling will be made.

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WHAT ARE THE ADVANTAGES OF DEBT COUNSELLING?

Debt counselling offers the over-indebted consumer the opportunity to act proactively when drowning in debt.

Advantages of debt counselling:

  1. Credit providers will not be able to take legal action against you.
  2. Protection from asset repossession.
  3. No blacklisting.
  4. Reduced monthly installments.
  5. Enjoy financial relief.
  6. Debt counsellor manages the process.
  7. On successful completion of the process, debt review will be removed from your record.
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WHAT IS DEBT COUNSELLING?

Debt Counselling is a formal process available to the over-indebted consumer which is regulated by the National Credit Regulator and the National Credit Act.

The debt counsellor will assess the financial position of the over-indebted consumer, which includes a lifestyle assessment.

After the debt counsellor has carefully considered and assessed the over-indebted consumer’s financial position, the debt counsellor will recommend to the consumer how to mitigate over-indebtedness.

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