What are the benefits of debt counselling?
The National Debt Review Center provides answers to questions that we frequently receive from potential and existing clients with regards to going under debt counselling/ debt review, as well as any other debt-related topics.
How does debt consolidation compare to debt counselling?
They are two very different ways of dealing with debt, be it bad credit debt or how to avoid bankruptcy or over-indebtedness. First of all debt consolidation or “free debt consolidation” (there is no such thing as “free”) as some people refer to it, involves borrowing more money which involves more interest payments than before. The difference is Debt Counselling or Debt Review will get rid of debt, by paying it off at an affordable rate and help you get out of debt, without borrowing more money and paying more interest. Debt counselling puts an end to the borrowing of money and additional unnecessary interest that comes with debt consolidation.
Will creditors continue pursuing me for payments?
Your creditors shall, according to the National Credit Act, stop pursuing you when you’ve been placed under debt review. They may contact you but they may not take legal action.
When I have applied for debt review, will creditors continue pursuing me for payments?
Your creditors shall, according to the National Credit Act, stop pursuing you when you’ve been placed under debt review. Let them know that we are your debt counsellors, you are under debt review and that we will be acting on your behalf.
Can creditors refuse to accept lower payments under the debt counselling plan?
Creditors do not have to accept any offers of repayment below the contracted minimum. However, it is our experience that they are prepared to accept reduced payment offers where we are able to demonstrate that the offer is reasonable and you are committed to repaying your debt through the debt counselling repayment program plan.
When I have applied for debt review, will my employer and work colleagues find out?
No, we never contact clients at work unless asked to do so. Your affairs will be dealt with in the strictest confidence.
When I have applied for debt review how long will it take for my situation to improve?
You will benefit from a realistic budget which will allow your creditors to be paid at a rate that is affordable to you. The length of time it will take for your situation to improve will mainly depend on the total amount of your debt, and if and when you’re financial situation improves.
Is debt review a loan?
No. This is a process in which your current debt liabilities are structured in such a way that you can afford to pay them back within your financial means.
Can I apply for debt review if I already have judgments?
You can still contact us. Just please ensure we know your complete credit history and don’t leave anything out. It is essential that we know the full credit record from the start, as this can have serious repercussions with the credit providers.
Do I qualify for debt counselling if I am unemployed?
No, I am afraid this is not possible. However if you are married ‘in community of property’ and your partner works, then you will qualify as a joint application. It is, however, essential that you get employment as quickly as possible.
Once I have applied for debt counselling will I have money left for the day to day expenses?
We do take into account your day to day living expenses prior to determining how much is available to repay your credit providers and a full inventory is taken of your day to day living expenses so that you will be able to live while you are repaying all your debt.
What will happen if one year from now I find myself in a better financial position, will I be able to get out of debt review?
No. Payment arrangements must remain in place until all debt has been repaid in full. You can, however, amend your payment arrangements at any time in order to shorten your repayment period. For example, you may increase your repayments, increase your deposits. When your debt is completely paid up your debt counsellor must issue you a certificate stating all your debt is paid, you are debt-free and advise your creditors and the credit bureaus you are debt-free.
Are there any accounts that do not get included under debt review?
Only credit agreements as defined in the national credit act may be included in the debt review process. Accounts such as a doctor or dentist or cell phone accounts are excluded. Also excluded are accounts in which legal action has been initiated prior to your application for debt review or where judgment or garnishee orders have been instituted.
What happens to my accounts or credit cards once I have applied for debt review?
All your accounts will be frozen by your creditors. This includes your credit cards, overdraft facilities, revolving credit facilities, and instalment accounts. You are required to continue to pay your accounts as best you can while your application is being processed.
Can I still go under debt review if I have been blacklisted by a creditor?
Yes, you can be placed under debt review at any time, provided a Debt Counsellor has declared you over-indebted and legal action has not yet commenced.
At what stage will my debt review listing be removed from the credit bureau?
The moment you are no longer in arrears and have paid off most debt excluding bonds, the Debt Counsellor can remove you from debt review and notify credit bureaus that you are no longer under debt review or over-indebted even though you may still have to pay off your bond.
Will I be blacklisted if I apply for debt review?
No, there is no blacklisting but if the Debt Counsellor finds the consumer to be over-indebted, they will add a flag to the consumer’s credit record to indicate to credit providers not to provide you with further credit because you are already over-indebted. The flag will be removed once the debt has been repaid and when the consumer is no longer over-indebted.
Will my name be listed at a credit bureau or be blacklisted if I have applied for debt counselling?
Yes, during the debt review period, your name will be listed with a credit bureau as being under debt review. Once the debt has been repaid the Debt Counsellor will issue a Clearance Certificate and instruct the relevant credit bureau to remove the debt counselling notation from your record. This means that all records that you were under debt review will be removed. Once this process is completed you should be able to access responsible new debt if required.
If I am under Administration, can I still apply for debt counselling?
Yes, you can rescind an Administration order. Although Administration is a separate legal process, the outcome may still be similar to that of the debt review process. In other words, you will still be required to pay your creditors all monies due and the money is paid through an Administrator. The process may, however, take longer than if you are just under debt review. Remember that in order to qualify for Administration, your debt cannot exceed R50,000.
If I am NOT over-indebted, can I still apply for debt review?
No, although you can still contact a Debt Counsellor for advice on how to manage your finances better. The Debt Counsellor will discuss various options with you.
Can I apply for credit while under debt review with a Debt Counsellor?
Yes, provided it is for a consolidation loan to repay all your debts. Other than that no, because if you are under debt review you will be flagged on the credit bureau as such until a Clearance Certificate is issued.
What happens if I’m married and I want to apply for debt review?
Married in Community of Property (COP): both spouse’s income and expenses have to be calculated in a joint application and both parties’ debt must be included. Married out of COP: generally a single application for the over-indebted party will be drafted for debt review. However, a joint application for debt review can be submitted if both parties agree. In the latter instance, both parties will be placed under debt review and the statuses updated with a credit bureau. Married Antenuptial Agreement: only the over-indebted spouse could apply for debt review although a joint application could be applied for if both parties agreed to this. Traditional Marriage: the application for debt review will be seen the same as a couple married in COP. Living together: a joint application can be applied for by both parties.
Must I continue to pay my accounts directly while I am still under debt review?
You will no longer pay your credit providers directly. If you are under debt review, the National Payment Distribution Agency (NPDA) collects the required funds from you and distributes the agreed monthly repayments to all your credit providers on your behalf.
Does debt review mean I get a payment holiday?
No, the debt review process does not provide you with payment holidays. You must still make monthly payments, as agreed with your accredited debt counsellor, from the first month you apply. If you fail to make your monthly payments you are in default and the Debt Counsellor and/or the credit providers could terminate your debt review.
What are the benefits of debt counselling?
A Debt Counsellor will help alleviate your financial strain as they’re in a position to negotiate new debt restructure plans, repayment periods and even interest rates with credit providers. Debt restructured repayment amounts are based on what funds you have only after your necessary expenses have been paid.
Are there any fees for debt counselling?
Yes, there are debt counselling fees and legal fees applicable to debt counselling; The NCR debt counselling fee guideline is obtainable from this link FEE STRUCTURE alternatively by calling the National Credit Regulator contact centre on 0860 627 627
For further information, please contact us at info@ndrc.org.za or phone 0878221249 or 041 101 1037
