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Now that you have taken the most important step to become debt free. Get the facts on what happens with the debt counselling process. When a consumer applies for debt counselling, a debt counsellor is required to inform all credit providers and credit bureaus of the application within 5 business days after accepting the application. The debt counsellor does this by way of sending a “Form 17.1” to the credit providers and credit bureaus by the debt counsellor.

The credit provider is then required to provide a certificate of balance. The debt counsellor conducts an assessment in accordance with the National Credit Act (NCA) regulations to determine if the consumer is over-indebted and to determine the amount available to repay debt.

The role of Debt Sage debt counsellors in the debt counselling process:

  • Assess whether a consumer is over-indebted,
  • Check for reckless lending arrangements issued by credit providers,
  • Place over-indebted clients under debt counselling, 
  • Develop a debt restructuring plan so the client can become debt free after a certain period of time.

If the consumer is found to be over-indebted, the debt counsellor should, within 30 days of the consumers application notify both the Credit Provider/s and the Credit Bureaus by means of the “Form 17.2”.

It is important to note that in terms of section 88(1) of the National Credit Act No. 34 of 2005, you MUST NOT incur any further charges under a credit facility or enter into any further credit agreements whilst under debt counselling. Should you do so, this will result in you being rejected from the debt counselling and legal proceedings from your credit providers will begin, which is very expensive.

Payment Distribution Agencies (PDA)
Once accepted under debt counselling you will pay one amount that pays all your debt which will then be distributed to your credit providers by a Payment Distribution Agent.

Termination of Debt Counselling
Under certain circumstances a credit provider can withdraw a credit agreement from debt counselling (terminate) and proceed with legal action. Termination can happen if you default on your rearranged payment plan or if your debt counsellor does not finalise the process within the prescribed time limits.

Clearance Certificates
In terms of section 71(2)(b)(i) of the NCA, a debt counsellor must issue a clearance certificate (Form 19) if the consumer has fully satisfied all the debt obligations under every credit agreement that was subject to the debt re-arrangement order or agreement. Once a clearance certificate has been issued credit bureaus will be required to remove all the information relating to debt counselling and you can then start getting credit again.

If Married in COP
You both need to apply for debt counselling.

Can a Debt Counsellor Terminate Debt Counselling?
A debt counsellor does not have statutory powers to terminate or withdraw the debt review process.

A consumer can be withdrawn from debt counselling under the following circumstances:
Once a debt counselling court order has been obtained, a consumer cannot terminate the debt counselling process. The consumer can however approach the court to rescind the order or apply for an order which declares that the consumer is no longer over-indebted.

Contact our debt counselling experts today, to review your case and see how the debt counselling process can help you get rid of debt.
 

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