Frequently Asked Questions

A Consumer is over-indebted when he/she cannot service his/her debts in a timely manner as agreed with credit providers.

A consumer under debt review can only be issued with a clearance certificate when:

When they either have paid up all their debts which were listed in the debt review court order or debt review repayment agreement

When all their short term credit agreements listed in the debt review court order or debt review repayment agreement which is short term agreements may include a vehicle financing agreement have been paid in full and the consumer is only left with a mortgage loan that is not in arrears in terms of the debt review court order or debt review repayment agreement.

Credit providers must issue paid-up letters on the short-term agreements prior to the issuing of a clearance certificate by the debt counsellor to ensure that the debt has been repaid in full. Once the clearance certificate is issued this must be forwarded to all the credit bureaus together with the paid-up letters. The debt counsellor and credit bureaus have to update their systems to show that the consumer has successfully completed the debt review process.

Pay a reduced monthly amount that you can afford. You save on renegotiated lower interest rates regardless of your credit score. Consolidate debts into one manageable monthly payment. Protection of your assets from repossession. Protection against legal action. Makes cash available to cover all household expenses. Stops collection calls from credit providers and attorneys demanding payment. Improves your money habits teaches one to save and pay cash when making any purchases. Flexible as it allows you to make extra payments, paying off your debt faster.

No, while you are under debt review and continue to pay your restructured instalment, creditor providers are prohibited from taking further legal action or attaching your assets.

If you are struggling to pay your financial commitments you are probably already blacklisted from obtaining future credit. The debt review process enables you to repay your finances according to the amount you can afford. Once you have repaid your credit providers in full, we issue you a clearance certificate.

Technically, you can also rescind a debt review order that was made by order of the court. If you choose to do so, you will have to renegotiate payment terms with your creditors and make payments in respect of outstanding amounts personally. In cases like these, you have to be aware that your creditors may not be willing to renegotiate payment terms, since they don’t have the guarantee as underwritten by the debt counselling firm.

‘Old debt’, also referred to as ‘prescribed debt’, is debt that you still owe a lender. However, because there has been no activity or any real attempts from a lender to contact you in connection with the debt for a period of three consecutive years, the debt ceases to exist.

If the debt is more than three years old and the credit provider did not demand payment of the debt.

You have not received summonses to pay the debt by a creditor in 3 (three) consecutive years.

If the correct rules are followed, the following are examples of debt which can become prescribed:

• Cellphone accounts
• Gym memberships
• Personal loans / Pay day loans
• Credit card accounts
• Retail accounts

If a debt has been dormant for the specified period, a debt collector cannot ask you for payment. It is against the law if they do.

If you suspect that someone is harassing you and demanding payment from you on a prescribed debt, raise prescription as a defence and refuse to make payment until the debt collector provides evidence that the debt is not prescribed.

The credit provider can provide reasonable evidence that they tried to contact you during the prescription period.

You acknowledge the debt, or make a payment on the debt.

The creditor takes legal action against you.

You are residing outside South Africa.

You are married to, or business partners with, the credit provider.

The process entails selling an individual’s current assets in order to pay off or lessen their current debt. In addition to this, the court will appoint someone to manage the clients’ money and thus, it is an expensive process.

• Clients are forced to sell all their personal assets eg. home, car, furniture, valuables.
• The process will cost clients at least R20 000 in legal fees
• Sequestration is not an option unless it is in the credit providers’ best interests, thus the client needs to offer at least 15% of what they owe
• Rehabilitation is only possible after a period of five years.

Voluntary distribution is the predecessor of modern-day debt review. It is the process by which

you voluntarily elect to have a debt attorney step in to assess your situation, draw up a payment plan and negotiate reduced payment terms with your creditors on your behalf.

Reckless lending is defined as when a creditor fails to conduct a detailed credit assessment as required by the National Credit Act (NCA) and still offers the consumer credit.

If the consumer does not understand the risks, costs, and obligations created by the proposed credit agreement, such a credit agreement is considered reckless lending. If the credit provider conducts an assessment and concludes that entering into the proposed credit agreement would cause the potential consumer to become over-indebted, but still enters into the credit agreement with the consumer, such credit agreement is classified as reckless lending.

Credit providers have a statutory obligation to actively prevent reckless credit in terms of Section 48A and 81 (3) of the Act.

Consumers are required to fully and truthfully answer the requests for information that creditors put to them. Creditors on the other hand are experts at financial matters and they use very sophisticated computer programs to figure out what the consumer can and cannot afford so they must be certain about the consumer’s financial status before they offer credit.

• The consumer didn’t get a quotation of what the credit will cost them.
• The consumer did not understand the documents shown about the credit.
• The consumer cannot read the language of the documents about the credit.
• The credit provider knew the consumer couldn’t afford to repay the credit and still offers the consumer credit.