Frequently Asked Questions
Scroll through our frequently asked questions for more information
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What does debt review entail? Debt Review, also known as Debt Counselling or Debt Consolidation, is a NCR Regulated program created through the National Credit Act. It legally assists over-indebted consumers to become debt-free. A Debt Counsellor assesses the consumers' financial circumstances and proceeds to restructure debts through a payment plan (proposal), which benefits both the consumer and credit provider. This process takes into consideration both essential living expenses and debt obligations of the consumer.
What is the purpose of Debit Cancellation Forms? These forms enable the appointed Debt Counsellor to cancel all active debit orders on a consumer's credit agreements, ensuring that no unnecessary debit orders take place on the consumer's account during the process. To avoid any unnecessary deductions and reversal complications, most Debt Counsellors recommend that consumers change their bank accounts.
What is the process for applying for Debt Review? To apply for Debt Review, any over-indebted consumer can fill out an application form (Form 16). Interested clients can request a call back, and one of our professionals will reach out within 1 business hour.
What is the role of The National Credit Regulator? The National Credit Regulator, more commonly known as the 'NCR,' is responsible for regulating the South African credit industry. It is also responsible for registering credit providers, credit bureaus, and debt counsellors, as well as enforcing compliance with the National Credit Act, also referred to as the 'NCA'.
Are bonds and vehicles eligible for inclusion under Debt Review? Bonds and vehicles can be included in the Debt Review process and will receive full protection from any legal action, provided that legal action through courts has not been initiated by the relevant creditor.
Is it possible for a client to select which accounts to include under Debt Review? According to Section 88 of The National Credit Act, all outstanding debt must be included under Debt Review to effectively assist consumers in rehabilitating their current outstanding debt.
What does the term 'proposal' refer to in the context of Debt Review? A proposal, also known as a payment plan, serves as a negotiation tool. It is a document issued by a debt counsellor to all listed credit providers after assessing the consumer's income and expenses. The proposal reflects the availability of funds for the consumer and suggests possible lowered interest rates on all accounts listed under Debt Review.
Is it possible for clients to apply for loans or any credit while under Debt Review? In order for the Debt Counsellor to rehabilitate the current outstanding debt, the consumer will not be able to incur further debt. Once all debt has been settled under the process, the Debt Counsellor will obtain all relevant paid-up letters for the issuance of a Clearance Certificate (Form 19) to all respective credit providers and credit bureaus, effectively clearing the consumer's credit profile.
Under what circumstances can clients apply jointly? If a couple is married in community of property, a Debt Counsellor will require a joint application that includes both spouses' information and consent in order to proceed with the assessment of the application as required by the Matrimonial Property Act.
Is it permissible for a client to rent property while under Debt Review? Indeed, a Debt Counsellor can account for a client's rental expenses within a budget and provide a letter for rent that indicates the amount the client can contribute on a monthly basis.
In the case of marriage in community of property, is it possible to make a single application? When married in community of property, a single application cannot be made as the consumers are legally liable for each other's debt obligations, indicating that they have one estate.
Does applying for Debt Review result in the client being blacklisted? A flag indicating the debt review application will be placed on a consumer's credit profile as a protective measure. This is not a form of blacklisting and will be removed upon the issuance of a Clearance Certificate after the successful completion of the process.
Is Debt Review and Administration the same thing? No, administration is an old debt relief procedure regulated by the Magistrates Court Act, catering only for debt up to R 50,000 and explicitly excluding bond and vehicle finance. Instalments under Administration, in our opinion, are often too low to cover the interest on accounts, with payments distributed every third month. In contrast, Debt Review is a more modernized debt relief procedure regulated by the National Credit Act, with no monetary limit on the debt, making bonds and vehicles eligible for inclusion under the process.
What are the ways to verify if a Debt Counsellor is registered? To verify whether a Debt Counsellor is registered, visit the NCR Register of Registrants website by following this link: https://www.ncr.org.za/register_of_registrants/registered_cp.php. Enter the debt counsellor's registration code in the search box, e.g., NCRDC3032 (without spaces), to view the counsellor's information and confirm their [Registered!] status.
In the event that creditors initiate legal action, what notices will be dispatched? If creditors initiate legal action, they are required to send certain notices according to the National Credit Act: • A Section 129 notice (before applying for debt review) informs the consumer of their default, providing 10 working days to address the issue before legal action is taken on the account. It suggests seeking assistance from a Debt Counsellor or alternative resolution agent to stop any further action. • A Section 86(10) notice (after applying for debt review) can be issued by credit providers if there are payment defaults during the debt review process. This notice informs both the consumer and the debt counsellor about termination from the debt review process. Once this notice is issued, the account no longer falls under the debt review process, and the consumer should negotiate directly with the creditor. The debt counsellor can advocate for possible reinstatement of the account under debt review if the consumer can cover the arrears.
What is blacklisting? Blacklisting is a commonly used term to describe the situation when a consumer is rejected for loans due to a low credit rating. However, it is important to note that there is no official process of being 'blacklisted'.
What is a Form 17.1 and Form 17.2? A Form 17.1 in the context of Debt Review is a formal document used by a Debt Counsellor to inform all listed credit providers that a consumer has applied for the Debt Review Process. On the other hand, a Form 17.2 Acceptance, also within the Debt Review framework, is used by a Debt Counsellor to inform all listed credit providers that a consumer has been determined to be over-indebted, meaning their expenses exceed their income. If a consumer is found not to be over-indebted, the Debt Counsellor will issue a Form 17.2 Rejection to notify creditors and the National Credit Regulator (NCR).
Can clients transfer from one debt counsellor to another? While clients can transfer to any debt counsellor of their choice, they are advised against switching to a new debt counsellor in an attempt to save more funds, as this can have a detrimental effect on their Debt Review Application, potentially leading to the termination of the Debt Review Process. The Debt Review process aims to reduce the monthly instalment towards the debt to a certain extent, ensuring it covers the interest and service fees. If the instalment is insufficient, it can lead to an increase in debt rather than a decrease, impacting the application and potentially resulting in termination, requiring the consumer to make contractual payments directly to credit providers.
What happens to the funds when an account has been settled? After an account is paid in full, any extra funds become available and are redistributed to the remaining accounts to settle the debt as quickly as possible. This process is also known as 'cascading'.
What is the purpose of a Clearance Certificate? The issuance of a Clearance Certificate (Form 19) signifies the successful completion of the Debt Review Process, confirming that the client has settled all debt obligations listed under the process. Once a Clearance Certificate is issued, all registered credit bureaus and credit providers are notified accordingly, accompanied by relevant proof, which will remove the Debt Review listing from the consumer's credit profile.
What is a Granted Court Order? A Granted Court Order is obtained to solidify all agreements between the debt counsellor and respective credit providers, effectively halting any further action (if legal action through courts has not already commenced). This Granted Court Order legally safeguards the consumer and their assets, preventing any harassment from the respective creditors.
Terminated from Debt Review, what does this mean? The Debt Review application of a client can be terminated by the respective credit providers and Debt Counsellor on record under the following circumstances: Payments received from the client do not align with the agreed-upon payment plan. The client does not accommodate a counteroffer from a listed creditor without valid reason or proof, which the debt counsellor can use to advocate the matter. The client does not cooperate, for example, by refusing to provide relevant documentation. Default occurs without consulting the Debt Counsellor or providing relevant proof. If a listed credit provider terminates the Debt Review process, they will issue a Section 86(10) letter to both the Debt Counsellor and the consumer as confirmation, also known as a 'termination letter.' Once this letter is issued, the client must make direct arrangements with the creditor for repayment of the terminated loan account, as it will no longer be part of the debt review process. The debt counsellor will adjust the consumer's budget to accommodate the terminated account outside the debt review process. Before terminating a client from debt review, a debt counsellor must send an Intention to Suspend letter to the consumer, providing 10 working days to address the issue. Failing to do so will result in final suspension, with a Form 17.W issued to all respective credit providers, notifying them accordingly. Consequently, the client will no longer benefit from debt review and must make direct arrangements with the credit providers for loan repayment. The debt counsellor will remain the debt counsellor on record until all debt is settled, upon which a Clearance Certificate can be issued to remove the consumer from the debt review process.
What are some effective strategies for building a credit score from scratch? With a 0-credit rating, it is advisable to start with small steps. Consider opening a retail store account and ensure making full and timely payments each month without defaults or partial payments. Another option is to act as a surety on a debt agreement for a trusted relative or friend, which can contribute to improving the credit score. However, consumers should be cautious when providing surety for someone, as this action can have a negative impact on their credit rating if the trusted relative or friend defaults on payments for the debt agreement. When signing a suretyship agreement, the third party (the individual with the 0-credit rating, in this case) agrees to the creditor or financial institution that they will fulfill the obligations of the principal debtor (the trusted relative or friend for whom the customer is providing surety) if they fail to pay.
What role do debt collectors play, and what occurs when accounts are referred to them? Credit providers often enlist the services of debt collection companies to help recover overdue debt. These debt collectors are permitted to add interest from the date of issuing the Letter of Demand to the consumer. Consumers are advised to negotiate and keep their creditors informed to prevent their accounts from being referred to a debt collector. Failure to repay the outstanding debt may result in legal action through the court.
What are the consequences when a debit order fails? If a debit order fails due to insufficient funds, banks usually impose a 'penalty fee,' the amount of which is determined by the terms and conditions of the specific credit provider. Such incidents can also have a negative impact on a credit score.
How does debt review impact a credit score? When a client applies for debt review, the debt counsellor and credit providers engage in a negotiation process to establish a reduced repayment amount over an extended period. During the listing period, the client cannot take on additional debt, allowing the debt counsellor to address the existing outstanding debt. After clearing all debts, a Clearance Certificate will be issued to the relevant creditors and registered credit bureaus, resetting the credit score to zero and offering the consumer a fresh start.
What is the process for cancelling debit orders after an application? The debt counsellor will furnish the client with the necessary debit cancellation form(s) for completion. After the forms are signed and returned, the documentation will be forwarded to the respective creditors within 5 working days of the application. This allows the listed credit providers 5 to 10 working days to cancel any active debit order(s) on the client's account.
What is the role of the PDA (Payment Distribution Agency)? The National Credit Regulator has approved Payment Distribution Agencies (PDAs) responsible for securely collecting consumers' funds and distributing them to the respective credit providers. Debt Counsellors are not permitted to directly collect and distribute funds to credit providers; therefore, consumers are advised to make payments to an accredited PDA rather than to debt counsellors. Below is a list of NCR registered Payment Distribution Agencies: DC Partner (Pty) Ltd Hyphen Technology (Pty) Ltd Intuitive PDA (Pty) Ltd CollectNet (Pty) Ltd You can find more information at https://www.ncr.org.za/register_of_registrants/registered_cp.php
What is a Garnishee Order? A Garnishee Order, also referred to as an Emolument Attachment Order, is a court-issued directive served by the sheriff of the court to an employer, instructing them to deduct money from an employee's salary or wages to settle a debt owed to a specific creditor. The deducted amount is taken from the employee's salary before it is deposited into their account.
What is POPIA? POPIA, which stands for the Protection of Personal Information Act or Act No. 4 of 2013, is the new law that all organizations will be required to adhere to. The purpose of POPIA is to safeguard citizens from potential harm by preserving their personal information and privacy, which is considered a fundamental human right.
What should I do if I disagree with the information on my credit report? If you need to dispute, update, or remove any information from your credit profile, you should reach out to the relevant credit bureau, complete the necessary application form, and submit the signed copy along with any pertinent evidence to the credit bureau. Upon reviewing your case, the credit bureau will furnish you with a reference number for further inquiries. Resolving the matter may take the credit bureau up to 20 working days.
What is the process for requesting a copy of your Credit Bureau report? As per the National Credit Act, consumers are eligible for one free credit report annually. You can reach out to any registered Credit Bureau to request a copy of your credit report; however, if another report is requested within the same year, the relevant Credit Bureau may levy an administrative fee. Below is a list of the four main Credit Bureaus in South Africa: • XDS • Experian • TransUnion • Compuscan
Is it permissible to skip payments while under Debt Review? After applying for Debt Review, it is crucial for the client to adhere to the agreed monthly installment without any defaults or partial payments, as any such instances can result in the termination of the Debt Review process by the listed credit providers.
What is a COB? A COB, or 'Certificate of Balance,' is a document provided by credit providers to a registered Debt Counsellor within 5 to 10 working days after a client has applied for Debt Review. This document includes details such as the account number, account description, inception date of the loan, original repayment term, outstanding balance, service fees, credit life insurance (if applicable), monthly installment, and interest rate. Debt Counsellors utilize the COB to adjust a payment plan (proposal) and initiate a negotiation process with the relevant credit providers for a reduced monthly installment and interest rate on the accounts.
Is it permissible to pay more than the quoted amount under Debt Review if there's an increase in salary? Indeed, this practice will aid in shortening the terms within the Debt Review process. Moreover, the consumer can specify the creditor(s) to which they would like to allocate the extra payment, enabling the Debt Counsellor to adjust the payment plan (proposal) accordingly. If funds permit, consumers can also settle accounts in full, with updated balances obtainable through their Debt Counsellor.
Upon the issuance of a Clearance Certificate, how long will it take for the registered credit bureaus to update the information? The issuance of a Clearance Certificate signifies the successful conclusion of the Debt Review process, confirming that the client has settled all debt obligations listed in the process. Upon the Debt Counsellor issuing the Clearance Certificate, all registered credit bureaus and listed credit providers are duly notified and provided with the relevant paid-up letters as proof, leading to the removal of the Debt Review listing from the consumer's credit profile. Credit bureaus are allotted 28 working days to update the information in their systems, and the processing of the information may take up to 3 months.
What is the process for notifying credit providers when a client applies for Debt Review? After receiving the completed and signed Form 16 (application form), the Debt Counsellor will input the information into their systems and inform credit providers by issuing a Form 17.1. A copy of the Form 17.1 will also be forwarded to the consumer for their examination and record-keeping as evidence of the application for Debt Review/Debt Counselling.
Is it possible for a client to apply for Debt Review while unemployed? No, employment is one of the qualifying criteria for the Debt Review process. The Debt Counsellor will negotiate a reduced monthly repayment, which the consumer must ensure is paid each month without any defaults or partial payments, as such actions can result in the termination of the Debt Review process.
What is a cascade summary? A cascade summary is a graphical depiction illustrating how the funds will be distributed to the list of credit providers on a monthly basis until they are fully settled. This document is included in a proposal (payment plan) following an assessment of the consumer's income and expenses, reflecting the availability of funds and proposing reduced interest rates for the accounts.
What is incidental credit? The National Credit Act 34 of 2005 defines an incidental credit agreement as an agreement for the provision of goods or services over a specific period, whereby a fee, charge, or interest becomes payable if the charged amount is not settled before a designated date. In the context of an incidental credit agreement, the involved parties do not intend to form a credit agreement. For instance, if a medical bill is overdue and the account is not settled on or before the specified date, and the medical practice forwards the account to a debt collection agency with interest charges, the debt would be categorized as incidental credit.
What is prescribed debt? Prescribed debt refers to consumer debts that have surpassed the prescribed time period where the borrower remains legally liable for the debt. Debts such as credit card balances or personal loans can only be prescribed after 3 years. As per The Prescription Act 68 of 1969, Section 10(1), a debt is considered prescribed if: The client has not acknowledged the debt in the past 3 consecutive years, either in writing or verbally. The client has not made any payments towards the outstanding amount or pledged to do so. The Credit Provider has not issued a summons for the debt in the last 3 consecutive years. Hence, if no payment has been made by the consumer towards the account for 3 consecutive years and no summons has been issued for the account within the past 3 years, the debt will be classified as prescribed, relieving the consumer of any legal obligation to repay the outstanding debt.
What are the 2 ways to exit Debt Review? 1. If a Form 17.2 Acceptance (declaration of over-indebtedness) has already been issued to all listed credit providers, but no Debt Review court order has been granted yet, the only way to exit the Debt Review process would be to declare the client not over-indebted through court. This declaration implies that the client's income and expenses demonstrate the ability to afford their contractual debt repayments (monthly installments to creditors before applying) with no arrears on their accounts. They can seek assistance from a Debt Review Attorney to declare themselves not over-indebted. 2. Once a Debt Review Court Order has been granted, a consumer cannot exit the Debt Review process until all outstanding debt is fully settled or until all unsecured debt is paid in full and only the bond shows a balance (with no arrears). The Debt Counsellor on record can then request paid-up letters for all accounts to issue a Clearance Certificate to all registered credit bureaus and listed credit providers.
How are terms calculated? After an application for Debt Review, all respective credit providers will issue Certificates of Balances, also known as 'COBs', reflecting all outstanding balances, monthly installments, service fees, interest rates, and credit life insurance listed (if any). This information is then entered into our systems, which automatically generates a term for each account when drafting a proposal, also referred to as a 'payment plan'.