What are the benefits of debt counselling?|
A Debt counsellor will help alleviate your financial strain as they're in a position to negotiate new debt restructure plans, repayment periods and even interest rates with your credit providers. Debt restructure repayment amounts are based on what funds you have only after the necessary expenses have been paid. This ensures that your debt repayments are, as far as possible, affordable for you and your family and acceptable to creditors.
Which debt can be included?
All secured lending such as property and vehicle finance can be included in the debt counselling application except where judgement has been obtained. Unsecured lending such as credit cards, store cards, and personal loans must also be included in the new debt review application. Service agreements, such as cell phone contracts, levies in arrears, electricity bills, pharmacy accounts, school fees etc. are not included in the debt review process.
Does debt review mean I get a payment holiday?
No, the debt review process does not provide you with payment holidays. You must still make monthly payments, as agreed with your accredited debt counsellor, from the first month you apply. Id you fail to make monthly payments you are in default and the Debt counsellor and/or the credit providers could terminate your debt review. This places you at risk as your credit providers can proceed with legal action.
Must I continue to pay my accounts?
You will no longer pay your creditors directly. If you are under debt review, HYPHEN PDA collects the required funds from you and distributes the agreed monthly repayments to all your creditors on your behalf. You will receive a statement from them on a regular basis. (refer to Hyphen PDA website in Resources tab.)
What is the difference between Debt Counselling, Administration and Sequestration?
Debt Counselling is where a Debt Counsellor develops a repayment plan that is affordable to the consumer and acceptable to the credit providers.
Administration is a legal process where the instalments are reduced, but credit providers only receive payment every three months and the term of repayment is much longer than that of being under debt counselling. Your debt must be less than R50 000 to qualify.
Sequestration is a legal process where assets of a natural person are sold to try and lessen the debt and the court will appoint somebody to manage your finances. This is costly and you will be blacklisted for five years until the court declares you as rehabilitated.
What fees will the consumer have to pay to a Debt Counsellor?
There is an initial R50 consultation fee. Other fees payable to the Debt Counsellor will be in accordance with the regulated fees as provided by the National Credit Regulator and will be included in your monthly instalment amounts. refer to the NCR website (see Resources tab) for further information pertaining to the current debt counselling fee structures.
Can I apply for credit while under Debt review with a Debt Counsellor?
Yes, provided it is for a consolidation loan to repay all your debts. Other than that, no, because if you are under debt review you will be flagged on the credit bureau as such until a Clearance Certificate is issued.
Why can a Garnishee Order (Emolument Attachment Order) not be included?
It is already a Court Order and only a court can make a change to a Court Order. Consult with your Debt Counsellor for more information.
Can I consult a Debt Counsellor if I have received a Letter of Demand (Section 129 Notice)?
Yes, a consumer should visit a Debt Counsellor immediately if you have received a Letter of Demand. Debt Counsellors can negotiate arrangements on a Letter of Demand or Warrant of Execution, but if a court judgement has been taken, they cannot include a debt under deb review.
Will I still be able to use accounts and credit facilities?
NO, once notification has been given to your credit providers, your accounts will be flagged, indicating to credit providers not to provide you with further credit because you are over-indebted. Once your debt has been paid in full and a Clearance Certificate is issued to you by the Debt Counsellor, the flag will be removed and you will be able to enter into new credit agreements.
If I have additional cash, can I pay the creditors directly?
All payment distributions must take place through a registered payment Distribution Agency. Arrangements for bulk or once-off payments can be arranged through your Debt Counsellor or debt counselling administration office. You must then contact your Debt Counsellor to make arrangements to restructure your repayments.
If I am under Administration, can I apply for Debt Counselling?
Yes, you can rescind an Administration Order. Although Administration is a separate legal process, the outcome may still be similar to that of the debt review process. In other words, you will still be required to pay your creditors all monies due and the money is paid through the Administrator. The process may however take longer than if you are just under debt review. Remember that in order to qualify for Administration, your debt may not be more than R50 000.
Why can't a bank of credit providers, provide Debt Counselling?
It is conflict of interest and forbidden by the national Credit Act.
Will I be blacklisted if I apply for debt review?
No, there is no blacklisting but if a Debt Counsellor finds the consumer to be over-indebted, they will add a flag to the consumer's credit record to indicate to credit providers not to provide you with further credit because you are already over0indebted. the flag will be removed once the debt has been repaid and when the consumer is no longer over-indebted.