Many South Africans find themselves in a pickle over debt.
If you find that your bond, vehicle, credit cards and account payments have escalated to the point where you are no longer able to afford them, then rather than face blacklisting, debt counselling or debt review is your only viable option.
In 2007, the National Credit Act (NCA) was introduced to assist over-indebted consumers avoid being blacklisted. Consumers undergoing debt counselling are protected from their creditors whilst under the debt review process. Unfortunately, only consumers who earn a regular monthly income and who can make monthly repayments can take advantage of this process.
If a counsellor decides that you can manage your debt yourself then you can expect to pay a rejection fee of R 300.00 excluding VAT, so only those who are really struggling should apply to undergo the debt review process.
How to proceed
Firstly ensure that you are dealing a reputable and registered debt counsellor. Debt-911 was established in 2007 and is registered with the NCR.
Provide your payslip, Identification document and full details of all your monthly repayment obligations. Ideally you should also have given some thought into producing monthly budget of other necessary expenses such as fuel, school fees, food lodging, etc.
We will then run computations taking into account how much is required to be set aside for day to day living expenses so as to establish whether a consumer is indeed over-indebted and whether he / she qualifies to undergo the debt review process.
Once approved, consumers officially apply for debt counselling, and a Debt-911 will then explain all the costs through. Costs are
- an application fee
- a debt restructuring fee
- a small monthly fee
- a legal fee that is required for the court order in the second month, and
- a withdrawal fee if a consumer withdraws from the process early
Debt-911 will then contact all a consumers credit providers to confirm all amounts and we will also contact various credit bureaus, informing them that a consumer has entered debt review, thus protecting a consumer from being blacklisted.
Once we have the agreement of all creditors, to the new repayment proposals offered by debt-911, we will seek a legal consent order confirming reduced fees and interest payments due by the consumer.
Where one or more of the credit providers reject the new proposed terms, Debt-911 will approach a magistrate with the proposed debt repayments to seek a decision. Reasonable repayment plans are often approved by the court.
Final repayment plans will then be presented and submitted to a payment distribution agency who will take a lump sum from consumers each month, then pay the various credit providers in accordance with the repayment plan.
It is critical that consumers keep up the monthly payments until such time as the whole amount has been paid off. Failing to do so will open consumers up to legal action by their creditors.
If you are contemplating how you are going to meet your monthly repayments, simply call us, SMS Help to 40935 or fill out the form alongside and a trained debt counsellor will call you to assess your personal situation and give you a free consultation.