What is Debt Review?
This is the process of being assessed and assisted by a Debt Counsellor. The Debt Counsellor reviews your debt. The process begins with your application and ends with the issuing of a “Clearance Certificate” once all your debts are settled. The process time can vary, depending on how much debt you have to repay or by you (the consumer) failing to make your agreed upon repayment. Most people use the terms debt review and debt counselling interchangeably to mean the same thing.
What does it mean to be “Over-Indebted”?
While this is now a legal term it basically means that anyone who, after deducting living expenses from their net salary, has less cash left over than the installments on their total debt, may apply for counselling as they are probably “over-indebted”.
What is a Joint Application?
This is a common type of application for Debt Review, where both partners (applicant and spouse or partner) go under review. This is the recommended application type for couples and is obligatory for couples married “C.O.P.” or communion of property.
Will I have to sell all my assets?
This is unlikely. One of the main benefits of debt counselling and debt review is that you can keep your assets. Each person’s situation is unique and in your case it might be wise to sell some assets that you do not need but this will be discussed with you and where needed you can consult with a FAIS advisor. Normally, the debt review process prioritises helping consumers keep assets like their home and car. This is commonly called “good debt”.
I have a summons or Section 129 letter – is it too late?
It is never too late to get good advice. Even if one of your debts has a summons all your other debts are no doubt pressurizing you too. A Debt Counsellor can try make arrangements with your creditors even those who have a judgment or garnishee order. They might not be part of the Debt restructuring Court Order but will be taken into account in planning your monthly costs.
I was under debt review before – can I sign up again?
By law, yes. If you were under debt review before and stopped paying you will find great resistance to the process from creditors. It will be an uphill battle. Knowing this you are forewarned that it will not be a simple affair but it is possible. Ask yourself if I did not stick to the process before will I stick to it this time? If you were under debt review and paid up all your debts before and got into trouble again it will be a much easier process and the creditors and court will be much more willing to help.
How long will it take?
Each consumers situation is different but many consumers are able to finish repaying their debt within 60 months. In most cases this means they have paid off all their smaller debts and only have a bond left. At this point many consumers then withdraw from the process and pay their creditors directly. In some consumers cases they are only under debt review for a few months such as during maternity leave or while waiting for the sale of an asset.
Should I pay a Debt Counsellor directly or make a cash deposit?
Be very careful if anyone asks you for money before doing anything for you. Be careful if a Debt Counsellor handles money for the process. If they say they do, then ask them to show proof that they are allowed to do so by the National Credit Regulator or by the National Credit Tribunal. The National Credit Regulator advise only using Debt Counsellors who make use of a Payment Distribution Agency. These agencies are audited regularly to make sure your money is safe.
What is “Reckless Credit”?
When a creditor gives a consumer credit that they know they cannot repay that is called reckless credit. There are also other types of illegal credit agreements. If you think this has happened to you a Debt Counsellor can investigate to see if reckless Credit has been granted. If this is the case a court could order the debt not to be repaid or postpone repayment on that debt.
Will I have to go to Court?
No. An attorney will represent you at court. We make use of a network of professional attorneys across South Africa to assist with the legal side of debt review and debt counselling. This means our clients seldom ever have to take time off work to go and wait at their local court for their matter to be heard. The legal side of debt review has become far more streamlined over time and is now much faster than ever before. Our expert partners ensure that the legal side of things requires little more than signing one or two documents for most clients.