Debt Review in South Africa The complete guide
Debt Review in South Africa isn’t as complicated as you’d think.
Most people find the idea of being in debt quite embarrassing and are often unaware that they have rights when it comes to their debt. They also believe that they will not be able to afford a lawyer, but luckily there is a legal process called debt review that can help you get out of your debts while also helping you budget so that you don’t get yourself into this situation again. If you want to be removed from debt review or want a better alternative contact Real Estate Assist
What is debt review?
In South Africa, debt review is a debt relief measure and is regulated by the National Credit Act.
If you are struggling to pay your monthly debt repayments, you may be eligible to undergo a debt review process. Debt review is also known as debt counseling. It is a formal process that allows you to pay off your debts in a structured manner.
Debt review is an intervention program aimed at helping consumers who fall into arrears on their credit agreements and are facing legal action from their creditors. It helps them by providing them with a legally binding agreement between themselves and all the lenders for which they owe money, in order for them to pay off their debts over a longer period of time. The goal of this process is to remove all the stress from dealing with multiple credit providers by consolidating all debts owed into one single affordable monthly payment based on your income and expenses, as well as lowering interest rates charged by credit providers (in certain cases).
Introduction to the Consumer Protection Act (CPA).
The Consumer Protection Act (CPA) provides protection for consumers against fraudulent, unjust or unreasonable conduct. It also ensures that goods and services are safe, of good quality and properly labelled.
Purpose of the Consumer Protection Act
The purpose of the CPA is to:
- Promote a fair, accessible and sustainable marketplace for consumer products and services;
- Establish national norms and standards to ensure consumer protection;
- Provide for improved standards of consumer information;
- Prohibit certain unfair marketing and business practices;
- Regulate consumer credit;
- Provide for improved standards of consumer information;
- Promote responsible consumer behaviour through education programmes;
- Create a framework within which collective consumer interests may be promoted and protected.
The National Credit Act (NCA).
The National Credit Act was introduced to protect consumers from reckless lending. The act regulates the credit industry, regulates credit bureaus and protects consumers from reckless lending and unfair credit agreements.
The NCA also established the National Credit Regulator (NCR), which is responsible for maintaining a healthy and competitive environment for the South African consumer. This means that it is not possible for you to take out more than one debt consolidation loan or a debt review program if you are already under debt review.
What is debt counseling?
First things first: what exactly is debt counseling? Debt counseling is an initiative referred to as debt review in South Africa. It was devised by the National Credit Regulator (NCR) as a way to help consumers who have found themselves struggling with their credit commitments. It’s not a perfect solution, but if you’re in financial distress it can provide relief and help you get back on track.
If you are considering debt counseling, you should know that there are two major benefits for consumers that take advantage of the process:
- Your credit provider cannot repossess your assets or blacklist you during the process
- You will be allowed to pay off your existing debts under more affordable terms and conditions
Are you under debt review?
Debt review can affect your credit rating and will stay on your credit record for a period of two years after the date of the application for debt review or five years after it was terminated, whichever comes first. It is therefore advised to apply for debt review only if you are unable to repay your debts within three months from the date of application. You can still get new credit (a loan or an account) while under debt review, but each potential lender will first have to grant consent before you can become their debtor.
When you are under debt review, certain rights are conferred to you by law as well as some restrictions that must be adhered to by your debt counsellor. If you die while under debt review, the administrator of your estate will have to notify all creditors concerned and settle any outstanding balances with them. Your assets may also be sold in order to settle outstanding debts.
A step-by-step guide to the debt review process in South Africa.
In order to begin the debt review process, you will need to provide your National Credit Regulator (NCR) registered debt counsellor with the following documents:
- A copy of your credit record.
- Proof of income.
- A copy of your ID document.
- An original, up-to-date statement for all accounts listed on your application form, including a breakdown of each account’s charges and interest rate. This is usually the most time consuming part as you need to contact each creditor individually and request this information from them. If any of these accounts are paid from an employer by stop order or debit order, you will also need to provide us with proof that you have stopped these payments or that they are no longer in place. In addition to these documents and statements, we will also require a list of all assets and liabilities from you as well as copies of any wills or trusts that may be in place.
Help me get out of debt.
If you are struggling to pay all your debts and don’t know where to start, you can contact a debt counsellor for advice or complete the steps below to get out of debt.
Debt Review Process in South Africa:
- Contact your debt counsellor so that he/she can assist you with the process.
- Submit an application for debt review at the National Credit Regulator (NCR) website of www.ncr-ncrcreditregistry.co.za .
- If approved, send a signed copy of Form 17A to be submitted by your debt counsellor via email or fax (0867018468).
- The NCR will issue an order placing you under debt review and inform your credit provider(s).
- Your credit provider(s) has 30 business days from receiving notification from the NCR to object, in writing, on reasonable grounds that relate to both affordability and sustainability of the proposed repayment plan, before they have to accept it as is or negotiate with the applicant..
- If your credit provider(s) does not object or there exists a dispute over affordability and sustainablity of the proposed repayment plan, then legal protection is granted after which creditors legally cannot take action against you until your name is removed from the NCR database by a court order (debt review removal).
Debt Relief
Debt relief is a legal process, but it’s not as formal as you might think. You can apply for debt relief to any registered credit provider in South Africa. By applying for debt review, you’ll be given a Form 17.1, which allows you to list all your debts with the respective credit providers (creditors) and makes them aware that you are under debt review.
The process of debt relief starts with calculating your monthly expenses and income and comparing this to what you have left over after paying off all your debts on time. If there isn’t anything left over, or if there isn’t enough left over to pay off your bills on time after paying off all your creditors, then you are over-indebted. Note that this calculation is completed by a qualified Debt Counsellor who has done their training through the National Credit Regulator (NCR).
Debt Consolidation
Debt consolidation is the process of combining several accounts into one, or consolidating multiple debts into a single, larger piece of debt. It’s a form of debt refinancing that entails taking out one loan to pay off many others.
This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.
When it comes to debt consolidation in South Africa we can help you with Debt Consolidation and Credit Protection Insurance to protect your family against any unforeseen circumstances.
We are able to provide you with monthly payments that are affordable for you and meet your needs. This then helps you get control over your finances and allows you to focus on paying back what you owe.
Real Estate Assist in South Africa can help you out of your current financial situation if you own a home or property
If you own a home or property, debt review is not the best option for you. It’s important to note that when you go under debt review, your credit record will reflect this and it will be marked negatively. Once your credit record is negatively affected, there are many limitations on what you can do with your assets such as buying another property or vehicle.
It’s also important to keep in mind that if you go under debt review and continue paying on your bond, the interest rate is likely to increase even though the monthly amount decreases.
Real Estate Assist can help you out of your current financial situation if:
- You have been blacklisted by credit providers
- You want to be removed from debt review or cancel your debt review
- You have been threatened with bankruptcy proceedings
- Your account has been handed over to a debt collection agency or legal action has been taken against you
- Your assets (home/property) are at risk of being repossessed
- Your property is headed for auction or foreclosure
- You want to unlock equity from your property
- You want to stop your sale in execution
- You want advice from a Real Estate Advisory to weigh all your options and to get the best solution for your current situation.
- Debt Review Removal
If you want to be removed from debt review in South Africa
Contact Real Estate Assist, we can assist you and help you become debt free and debt review free.
