The process

The debt review process outlined in the National Credit Act comprises the following steps:

1. Consumer approaches a Debt Counsellor when they are unable to honour their monthly repayments on credit agreements in a timely manner.
2. Consumer completes an application form, pays a R57 application fee and provides the Debt Counsellor with a copy of their pay-slip, account statements and bank statements.
3. Debt Counsellor issues a notification to all creditors and credit bureaus within 5 business days.
4. Debt Counsellor conducts an assessment of the consumer’s over-indebtedness.  The consumer must:
   
   • comply with any reasonable requests by the Debt Counsellor to assist the evaluation of her state of indebtedness and the prospects for responsible debt rearrangement; and
   • participate in good faith in the review.  The Debt Counsellor must complete the assessment within 30 business days after receiving the consumer’s application for debt counseling.
5. If the consumer is not over-indebted, a Letter of Rejection is sent to the consumer, creditors and credit bureaus within 5 business days.
6. If Consumer is over-indebted, the Debt Counsellor has 30 business days to negotiate payment rearrangement proposals with all creditors. Any arrangement the Debt Counsellor makes with creditors must be in writing and signed by all the creditors and the consumer.
7. If this proposal is accepted, the Debt Counsellor must file it as a Consent Order with the Clerk of the Court.
8. If the consumer and/or any creditors reject the proposal, the matter is referred to the Magistrate’s Court.
9. The Debt Counsellor obtains a debit order for the consumer’s reduced monthly payments for a PDA to collect and distribute to the creditors.

It sounds straight forward but in practice DEBT REVIEW is a laborious process as all creditors have to reach an agreement or compromise by accepting lower repayments.  It pays to stay in touch with your Debt Counsellor throughout the process and to keep paying your creditors as much as possible while a reduction in payments are being negotiated.