Even though Debt Review (DR) was incepted during June 2007 with the implementation of the National Credit Act 34 of 2005, we often find that some members of the public have the most ludicrous concepts about the process and the effects and benefits thereof. Some think it is another loan, others consider it a process wherein their debt is “written off” without them having to pay their creditors, or most often the process is associated with Administration.
In an attempt to clarify some of the confusion I will answer some frequently asked questions.
How will my credit record be affected?
Once you have applied for DR the Debt Counsellor (DC) will register you with the National Credit Regulator (NCR). Subsequently the NCR will notify all relevant Credit Bureaus of your application and note same on your credit record. Once the debts have been settled in full all history of Debt Counselling will be removed from your record.
Can I acquire further credit whilst in debt review?
No, once you have applied for DR no further credit may be granted to you. This will constitute reckless credit in terms of Section 80 of the NCA. This means you will not be able to use your credit cards, retail accounts, overdraft or any other type of credit facility.
Will I be able to apply for credit after I have paid all my debt?
Most definitely, once you’ve settled all debt and DC has issued you with a Clearance Certificate, you will be entitled to apply for credit. As per question one, all records of debt review will be cleared from your credit record subsequent to fulfilling your debt review obligations.
Can I pay the debt review installment if and when I want / can?
In terms of Section 86(10) of the NCA, should a consumer default on their debt review payment the credit provider may then terminate the debt review and proceed with legal action against the consumer. The instalment needs to be maintained in order to enjoy the protection from legal action the debt review process offers consumers.
How long will it take until I’m debt free?
This differs from one individual to the next. Prior to drafting a proposal for your creditors, we assess your monthly income, living expenses and total outstanding debt. Based on the aforementioned we draft a budget and calculate your monthly instalment payable to creditors. The repayment term depends on the instalment a client is comfortable with versus their total debt.
What happens to my policies and insurances once I’ve applied?
We provide for life insurance policies and retirement annuities in your budget within reason. It should be clear that you are not intending to enrich your estate to the detriment of your credit providers so a balance must be kept.
All insurance policies linked to credit agreements have to remain in place. For instance should your vehicle be financed, the contract states that the vehicle must be insured at all times. Failure to provide the creditor with proof hereof will result in the vehicle being placed in storage until such time proof of insurance is submitted.
What happens if my creditors don’t accept my payment proposal?
It’s simple; you offer what you can afford to pay according to your reasonable budget. When I say reasonable I mean we cannot include R5,000 for casino expenses. Should we fail to come to an agreement with a credit provider, the matter will be referred to the Magistrates Court, where a Magistrate will rule on the application. In most cases, you do not have to attend these hearings.
Can I omit some of my accounts and include others?
No. All accounts are to be included in your application except of legal action has been instituted thereon prior to your application for DR.
Does my wife / husband need to apply with me?
This depends on whether you are married in / out of community of property and whether your spouse has co-signed on credit agreements. Should you be married in community of property you would need to apply together as the law views your joint estate as a single estate.
Should you be married with an ante-nuptial contract you can apply for debt review without your partner. Only your income, monthly expenses, and creditors will be taken into consideration in your application, but all assets jointly owned must be disclosed. Traditional African marriages are viewed as in community of property, while Islamic religious marriages are seen as being out of community of property.
I hope this clears some of the confusion and answers some of your questions. Please contact us should you have any further questions.