Now that you have taken the most important step to become debt free. Get the facts here on what happens with the debt review process. When a consumer applies for debt review, 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.
The credit provider is then required to provide a certificate of balance (COB). 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 Telepro Consultant debt counsellors in the Debt Review Process is to:
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 enter into any further credit agreements (borrow) whilst you are under debt review. Should you do so, this will result in you being rejected from the debt review process and credit providers take legal action, which can be very costly.
The Debt Review Process is explained below in summary as follows:
Upon receiving all the necessary documentation an assessment will be done and within 24 hours and we will advise you on whether you qualify to be put under debt review.
If your application is successful, we will notify your credit providers including credit bureaus of your debt counselling status.
We will proceed to work out a debt repayment plan (DRP), after compiling a workable household budget with you that considers your monthly income & living expenses. The DRP will then be submitted to your credit providers for their agreement within 30 business days.
The debt review application will then be referred to the Magistrates Court to obtain a court order or to the National Consumer Tribunal (NCT) for a consent order.
You will have to affect a single payment to your creditors that will cover all your debts via the Payment Distribution Agency (PDA) appointed by the NCR as scheduled in the DRP. This will be a temporary arrangement until the case is made final by an order of the court with the creditors.
Please note that Telepro Consultant fees become payable once you are placed under Debt Review within the first month of enrolment.
We will on a regular basis supervise your payments to the PDA and should there be any changes in your circumstance, we will advise all parties and make the necessary changes accordingly.
When you have finished paying all your debts, we will issue you with a Clearance Certificate and only then can credit bureaus remove your debt review status from their records. Thereafter you will be able to apply for new credit.
Payment Distribution Agencies (PDA)
PDAs were created to help manage payments between consumer and credit providers. They basically give comfort to the consumer when they hold money in trust before paying it your credit providers. A PDA is accredited by the National Credit Regulator (NCR) as well. Once accepted under debt review you will pay one amount that pays all your debt which will then be distributed to your credit providers by a Payment Distribution Agency. The consumer pays their monthly contribution to a PDA and the Debt Counsellor informs/ instructs the PDA who to pay and how much. The PDA is tasked to send you monthly statements to show how monies that you are paying are being distributed. If you do not have access to your statement please get in touch with us so that we rectify this.
Termination of Debt Review by Credit Providers
Under certain circumstances a credit provider can withdraw / terminate a credit agreement from debt review and proceed with legal action. Termination can happen if you default or do not pay your rearranged payment plan or if your debt counsellor does not finalise the process within the prescribed time limits.
Debt Review Clearance Certificate
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 Community of Property (COP)
If you are married in Community of Property (COP) you and your partner need to apply for debt review.
Can a Debt Counsellor Terminate Debt Review Process?
A debt counsellor does not have statutory powers to terminate or withdraw the debt review process.
A consumer can be withdrawn from Debt Review Process under the following circumstances:
Once a debt review court order has been obtained, a consumer cannot terminate the debt review process. The consumer can however approach the court to rescind the debt review application if there was no court order in place.
Contact our debt review experts today, to review your case and see how the debt review process can help you get rid of debt.