What is Debt Review / Debt Counselling | LoansLoansLoans.co.za | Submitted Article

LoansLoansLoans.co.za

We will find you a loan, simple online application, same day
approval and loans up to R150 000 • Blacklisted can apply

pawn loans south africa
easy cash loan

What is Debt Review / Debt Counselling?

Article by Khathutshelo Nedombeloni  |  Read more submitted articles here
Despite South Africa subsisting global credit crisis in recent years, scores of consumers are nonetheless severely indebted. Recent statistics reveal that 46 percent of credit consumers had damaged records while 19 percent were 1 to 2 months in arrears and hardly 35 percent of consumers were entirely up-to-date with their payments. If you are currently unable to make monthly payments debt review is an answer. Debt counselling is a process a consumer partakes in to get rid of debt. It entails budgeting advice, reorganization of payments, negotiation with credit providers, management of payments and aftercare services. If a consumer is battling to pay debts the correct thing to do is to make contact with credit providers immediately to discuss the situation and if they cannot assist, it is judicious to get in touch with a reputable debt counsellor. Legislation pronounces that once a credit provider takes legal action a consumer forfeits protection provided by debt review/debt counselling.
According to National Consumer Regulator (NCR) a debt counsellor is someone who is registered with them (NCR), who assists consumers experiencing debt-related problems, and are having difficulty making their current monthly payments. To execute this job a debt counsellor requires considerable experience and skills in negotiating with consumers used to a particular lifestyle and credit providers who are mostly interested in recouping their money.

To apply for debt counselling a consumer has to submit a prescribed Form 16 along with all credit agreement documents a consumer may have with creditors. A debt counsellor will accordingly consider the financial standing of a consumer. Thus establish if a consumer is over indebted. Additionally a debt counsellor will determine if creditors were negligent in approving credit. By law a debt counsellor has to make this declaration within 30 business days from the date of application.
Once a debt counsellor has acknowledged receipt of a particular application, informs all creditors involved as well as credit bureaus of the application. Debt counsellors have five business days to submit Form 17.1 to creditors and request to be issued with a certificate of balance.

Meanwhile a debt counsellor draws up a provisional repayment plan to be tendered to a registered Payment Distribution Agency (PDA) to ascertain payments to creditors do not cease during the process. Consumers are protected from any legal action during the first two months from the date of their application to be placed under debt review. This allows consumers to negotiate payment arrangements with credit providers. On receipt of form 17.1 creditors have to respond within five days providing debt counsellor with certificates detailing account balances of a consumer. With the information provided assists a debt counsellor to establish a status of indebtedness of a consumer and either accept or reject an application for debt review using form 17.2.
Through Form 17.2 a debt counsellor informs all creditors and credit bureaus that the consumer has either been accepted or rejected for debt counselling. Based on what a consumer can afford to pay, a debt counsellor will draw up a permanent repayment plan and subsequently ask for a consent order from either the National Consumer Tribunal or a magistrate court as soon as credit providers have accepted the repayment proposal. If creditors reject a proposal a debt counsellor transfers such a matter to a magistrate court making a suggestion with optimism that it would be made an order of court. If a court also rejects such a proposal a debt counsellor risks cessation of the whole process. However if a debt counsellor is afforded a further prospect to amend a proposal that creditors or a court eventually accepts, a preferred PDA resumes directing payments to creditors.
At this phase a PDA ensures statements are delivered to a consumer on a monthly basis. Thereafter a PDA also provides a debt counsellor and creditors with payment schedules and attends to queries from stakeholders. Once all monies have been paid, a debt counsellor will issue a consumer with a clearance certificate. A debt counsellor also informs all credit bureaus of new developments. Credit bureaus then remove debt counselling status from a consumer`s credit record.
Article by Khathutshelo Nedombeloni  |  Read more submitted articles here