Making the right choice is vital for your financial future

Nurture your Future


Sound choices.

The topic of this week’s blog is, making good, sound choices when it comes to finances that will ensure the success of a debt review.

When going into arrears with your money, catching up is not as easy as one thinks.

One of the biggest problems facing consumers when in debt review, is failing to keep their payments up to date as the court order stipulates.

Here at CDS we find that one of the main reasons consumers take their matters away from the DC’s(Debt Counsellors), is that they believe they can administrate their own debt review after the debt counsellor has initialised the agreements with the creditors. One must understand the DC’s skills and registration mandate with the NCR, that will assist the consumers from start to finish. At CDS It is the DC that spends quality time explaining the pros and cons that our consumers can expect when they are over-indebted.

Let us just take some time and cover a few of the problem areas, as it will help you to understand the value of paying the monthly after care fees to the DC.

Debt review is a contractual agreement between the consumer and the DC. We often see consumers leave the program without understanding the implications of their actions. One must take into consideration, that before the debt review commenced, a contractual agreement between creditor and consumer was agreed to on specific conditions regarding to the payment, interest and term of the contract (when money was borrowed, a vehicle purchased or a home loan taken out at the bank) which now is amended by the debt counsellors mandate to negotiate a more affordable payment structure.

Usually when consumers default on their contractual credit agreements before a debt review application is considered and find themselves in this position and they feel  threatened, they will contact their creditors and ask for a reduced payment relief, which is usually for 60 days or so. Once the time lapsed the consumer must divert back to the contractual debt repayment agreement. This is where the DC comes in and assists the consumer with a debt review application.

The DC will negotiate with the creditors the new affordable payment plan and refer the matter to the court or the tribunal. Bearing in mind that the consumer is not the applicant of the court order but the registered debt counsellor is the applicant. Some Consumers do not take responsibility when they are finding themselves in this positition  to understand the terms and conditions of the court order, it is important for consumers to embrace the fact that is their their money and their debt, the debt counsellor merely has a statutory obligation to restructure the debt when the consumer is found over-indebted as per the National Credit Act.

This could be some of the conditions in a consumer’s existing or new debt restructuring order.

  1. Is there is clause when your debt review must be reviewed?
  2. Does the order state you must pay your money to a PDA, that must pay your creditors and the DC after care fees?
  3. Does your order clearly state the terms of your debt review?
  4. When the court order makes provisions for a 0% interest on some of your creditors that has consented, it is vital that you pay as per the order PDA, defaulting could be the reason this agreement could lapse.
  5. Are you sure all creditors were served the copy of the court order by the registered DC?
  6. Are you sure your registered DC explained the terms & conditions of the court order to you in full and in person.
  7. If you are unsure about any terms & conditions in the court order, it your responsibility not to hesitate to ask any questions, because it is the job of the DC to explain everything in full until you understand the court order.

Stay with the your debt counsellor that ensured the court order was granted and don’t transfer your debt review (without a valid reason) to another DC. It can be one of the reasons you can lose your home or your car, etc. Be aware of debt counsellors promising you they can get you a better repayment plan, that will cost you less than what you are currently paying. This is a mistake made by many consumers, these debt counsellors usually charge the consumer new fees, understanding your debt restructuring order and skipping payments, even if it is fees to another debt counsellor, places you in breach of your order.

We at CDS really do understand that consumers want to stop using the debt counsellor when the process is in the early months or before the court grants the application. Everyone wants to save money by doing things themselves. It is how we humans work. Is it worth the effort taking shortcuts that is not in your best interest.

Be aware when you decide to disgard the debt counsellor’s conditions in the court order to pay your creditors directly and not use the PDA(Payment Distribution Agent). The debt counsellor initially spends time with the consumer doing a personal assessment, motivating the financial ability to all the creditors, negotiating the terms of what is affordable and ensuring all parties understand why the consumer can’t pay more when the creditors present a counter offer. The Debt counsellor acts within the mandate of the NCA(National Credit Act) to ensure the consumer’s over-indebtedness is dealt with in the correct way. Therefore consumers must be informed how their debt review works and what they can and can’t do. The court accepted the terms of the new payment plan and the consumer must adhere to those conditions.

Paying the DC after care fee is an imperative part of the debt review process every month, until the consumer exits and the debt counsellor’s findings he/she is no longer over-indebted and issue the clearance certificate. This is most likely the existing condition of the court order.

The reasons why consumers are in breach of their court orders:

  1. Consumers pay the incorrect amount to creditors.
  2. Creditors can’t allocate the funds as the normal account hes been closed and a new debt review account opened. Money is not allocated. Account marked in default – no payment.
  3. The creditors terminate because only the PDA can pay the debt review payments.

Therefore, the debt counsellor must remain part of the process to ensure the court order is enforced. Consumer should understand the duties of the debt counsellor’s responsibility. It is not just towards the creditors, but to the consumers as well ensuring creditors do not harass them and that payment inquiries are resolved.

That is why the debt counsellor will report creditors ignoring the debt review consent order and harass consumers who’s payments are up to date as per the PDA statements.

Consumers doing these debt review things on their own way, risk the debt review being terminated. This can lead to the creditors proceeding with legal action, making it difficult for the debt counsellor to prove payments and helping the client re-instate the account back into debt review.

Debt review is a brilliant tool that can help consumers, who are finding themselves over-indebted. The goal is to settle the debt in the shortest period or as quick as possible.

By doing the debt review things your way, can result in a shocker when the DC refuses to issue the clearance certificate unless the outstanding after care fees is paid, which means a lot of pressure to make that payment in one payment to settle any arrears outstanding to the debt counsellors.

You can run the race without a trainer and achieve no results, or you can pay a professional trainer and win first place.

So YES, you do need the services of the registered debt counsellor from start to finish… Paying for peace of mind is priceless when you need your keys to financial freedom.

If you need our help to get a free debt assessment and see how much you can pay less on your debt, please go to our Contact Us page to complete your information, hit the submit button, and one of our friendly assessment consultant will be calling you during office hours you can also find our Whatsapp details on the contact us page.

Remember to download your April 2017 debt free magazine: http://debtfreedigi.co.za/wp-content/uploads/2012/11/Debtfree-Magazine-April-2017-Download.pdf

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