What is Debt Review or Debt Counselling?

What is Debt Review or Debt Counselling?

Debt Review came in to effect in June 2007 with the creation of the National Credit Act (NCA) and National Credit Regulator (NCR).

A person is over -indebted when after paying for essential living expenses (like food, transport and insurance) when there is not sufficient funds available to pay for all the monthly debt or monthly instalments on debt. Any person that is over- indebted and that earns an income can apply for Debt Review.

Debt Review or Debt Counselling could be a life saver or life changer to an over- indebted consumer. Before June 2007 a creditor would take legal action against any person that falls behind on monthly payments. Today we have Debt Review.

Any person who is unable to pay his full monthly debt payments can apply for Debt Review. A Debt Counsellor will be appointed to negotiate on your behalf to creditors for payments that you can afford. This is great, because before you as individual had limited negotiation power with the creditor. Now you have a debt counsellor on your side to negotiate affordable payments to the creditor.

Debt Review Process

The consumer applies for debt review with the help of a debt counsellor or consultant. The Debt Counsellor will explain to the consumer what debt review is.

The consumer completes and signs a debt review application form. The form is called a Form 16. Form 16 together with supporting documents is handed over to the debt counsellor or consultant.

The details on the form 16 are captured immediately. Within 5 days (normally sooner) all creditors are notified with form 17.1 that consumers is applying for debt review. The debt review application is now in process. No legal action from creditor is now possible.

The debt review process takes 60 working days. The creditor has 5 business days to provide information on consumer. This is checked against what the consumer presented to debt counsellor. After 5 days, the creditor is reminded to give feedback. Another 10 days grace is given to the consumer.

If the debt counsellor does not receive conformation from creditors, he may presume that the figure provided by the consumer are correct. The debt counsellor will now determine if the consumer is over indebted.

The debt counsellor will now prepare a debt restructuring proposal to the creditors. The proposal must be sent 25 days from date of application. All creditors have 10 days to respond. If there is no response, the creditors will get a reminder and another 5 days to respond.

The proposals will be sent to various creditors.

For more info on debt review : Email: jjerrccs@jacqui-k.co.za

Website: www.jjerr.co.za

Debt Counsellors have a duty to make all debt review applications to Court.

Debt Counsellors have a duty to make all debt review applications to Court.

The National Credit Act was fully implemented in 2007 and Debt Counsellors now have a duty to make all debt review applications to Court.We as Debt Counsellor’s must subpoena all the creditors to court. Some creditors don’t adhere to the National Credit Act therefore once a creditor is Subpoena to Court. When a client receives a letter of demand we can still proceed with a Notice of Motion order that we have received from the Clerk of the Court. The Notice of Motion order have the court date, that is usually the Legal document that creditors require to Pend all Legal action.

Russell Damon NCRD263 a Registered debt counsellor at JJerr Consulting firmly believes if all debt counsellors make Court applications to court. Creditors will have a back foot in the industry. Creditors intend to put additional interest on their clients’ accounts. And yes they do have the right to do it. But all this blow up in proportion as extra interest accumulate. When a matter is at Court creditors must pay more cost for attorneys. As Debt Counsellors we notify our clients what the legal fees will be. This past week I have been placing matters on the Court Roll. It took so much time but it is worth the effort as you see your client happy.

We as debt Counsellors are moving in the right direction. Building a relationship with the creditor is also a must as you can pend the legal action. You can also get a consent order from the creditor as some creditors want to avoid going to court. A Consent order is where the creditor accept the agreement that the debt Counsellor offer. How lovely it will be if all creditors can agree to consent orders. Let’s face the creditors in Court. The pressure is always there for the debt counsellor to obtain a sooner date. Only the Magistrate can make a final ruling regarding the clients debt arrangements.

Regards

Russell Damon DC 263

Website: www.debtbreaker.co.za & http://jjerr.co.za

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