Debt Review is a process where the consumer approaches a Debt Counsellor, who in turn negotiates with your creditor providers with the aim of reducing instalments and interest rates. The end result is to assist the consumer to reduce their over-indebtedness. It offers protection against legal action from Credit Providers allowing you to pay a reasonable instalment.
More about Debt Counselling
What is Debt Counselling
Debt counselling is a process of assisting consumers that are experiencing debt related problems through:
- Budget advice;
- Restructuring their payments;
- Negotiating with credit providers on their behalf, and
- Monitoring their payments while
- Providing after-care services
Debt counselling is done by a debt counsellor. This is someone who is registered with the National Credit Regulator (NCR) and who assists consumers who are experiencing debt-related problems and are having difficulty making their current monthly payments by providing them with budget advice support and mediation with credit providers.
How does it work?
If you believe that over-indebted you have the right to apply to a debt counsellor to have yourself declared over-indebted. This procedure is only in place in respect of credit agreements where the credit provider has not issued Summons. The purpose of debt review is to head off legal action to seek a negotiated settlement and to obtain a court order against the credit providers forcing them to accept a lesser instalment and/or to extend the repayment period of the agreements.
The procedure provided for by the Act is as follows:
- You (“the consumer”) apply to us (“the debt counsellor”)
to be declared over-indebted.
- Upon receipt of your application and payment of the statutory
fee of R50.00, we will give notice to all credit bureaus
and to all your creditors that you have applied for a
debt review. Thereafter, for a period of 60 business
days, and whilst the debt review process is still ongoing,
your creditors under your credit agreements may not proceed
against you for payment of your instalments or repossess
any of the assets under the credit agreements such as
your house, car or furniture. You may however not incur
further credit during this period.
- You will be required to complete a statutory form at our
offices setting out all your financial information. We
will verify this information with your creditors.
- Should we find that you are over-indebted, we will attempt
to reach a settlement with your creditors on reduced
instalments, interest and capital. Should this fail,
we will ask the Court to make our proposal an Order of
Court. Such Order will reduce instalments and extend
the period of your credit agreements.
- As long as you honour your obligations under the debt review
program, your creditors have no recourse against you
or your assets.
- Once your debt has been paid in full, we will issue you with a clearance certificate confirming that your debt review program has been completed and that you are Debt free.
How much does it cost?
- The Debt Counsellor may receive the following amounts in
respect of consumers who have applied for debt counselling:
- An application fee, limited to the amount prescribed in terms
of Schedule 2 (2) of the Act, recoverable directly from
the consumer upon receiving an application for debt review;
- A rejection fee of R300.00 (excluding VAT) in respect of consumers
whose applications have been rejected in terms of section
- A restructuring fee of the lesser of the first instalment
of the debt re-arrangement plan or a maximum of R6000.00
(excluding VAT), in respect of a consumer whose applications
have been accepted in terms of 86(7) (b) or 86(7) (c).
(Should a joint application be required, the fee can
be increased to a maximum of R6000.00 (excluding VAT).
- Should a Debt Counsellor fail to submit proposals to Credit Providers
or refer the matter to a Tribunal or a Magistrate Court
within 60 business days from the date of the debt review
application the Debt Counsellor has to refund 100% of
the fee paid by the consumer (excluding the application
- A monthly after-care fee of 5% (excluding VAT) of the monthly
instalment of the debt re-arrangement plan up to a maximum
of R400.00 (excluding Vat), for a period of 24 months,
thereafter reducing to 3% (excluding VAT) of the monthly
instalment, to a maximum of R400.00 (excluding VAT),
for the remaining period of the debt re-arrangement plan.
- Payment of the monthly after-care fee is to commence in the
2nd month after the amount in 1.3.1 above has been paid.
- Should the consumer withdraw from the process after completing
stages 1.3 above, a fee equal to 75% of the restructuring
fee as per 1.3 above is payable by the consumer.
- A legal fee for a consent order of R750.00. The legal fee
for the consent order may only be deducted in the 2nd
month after the amount in 1.3.1 above has been paid.
If the consumer’s affairs cannot be resolved through
a consent order, and there are additional costs for further
legal processes, these need to be separately negotiated
with the client. The Debt Counsellor should be able to
produce proforma invoices issued to them by their lawyers
for legal services when so requested by the NCR.
- The applicable fees and related debt counselling services will be set out in an addendum to Form 16, which needs to be explained to the consumer and signed by him/her.
If you are having trouble keeping up with your debt repayments and you have R50,000 or less outstanding, then we can help you!
More about Debt Administration
What is an Administration Order
An administration order is where the courts place an order to cover all of the debtor’s outstanding debt. The debtor will make a monthly payment to his or her administrator and the administrator will issue those payments on a pro-rata basis to each of creditors. Whilst the order is in place, no creditor that the debtor owes money to who is included in the order will be allowed to take any action against the debtor. Letters and debt collection procedures against the debtor will be stopped. In order to be eligible to apply for an Administration Order the debtor must have an attorney apply to court on his behalf. The debtor must owe monies to more than 1 creditor and the debtors total debt must be LESS than R50 000.
Only applicable to Judgements, non-credit agreement and credit agreement, due and payable to a maximum of R50 000. (Excludes:
Bond Repayments, Hire-Purchase Accounts, Maintenance
Orders & Vehicle Repayments)
- Consumer cannot incur further debt without disclosure of
the administration order to the Credit Provider, otherwise
it is a criminal offense
- Protection against your creditors and no one may take judgement
- The Court decides how much you need for basic necessities,
and then determines how much must be paid to an administrator
- Credit Providers get distribution every month
- Client gets a statement monthly from the Administrator to monitor progress