Step 1
The client walks into your office and requests that he/she would like to be placed under debt review. The following must then be done:
(a) The client must fill in Form 16 as prescribed by the NCR (Annexure A);
The following documentation will also be required in order to assist the Debt -Counsellor with the application:
Identity Document of the consumer
Salary Advice of the consumer income. If the consumer is self-employed then a spreadsheet from the consumer’s auditor.
A statement of each of all the consumer’s debts.
Determine which debts are judgments and which debts have no legal action pending.
Ensure that the consumer signs the Form 16.
Obtain a reason as to why the consumer can no longer pay his monthly obligations, as this is necessary as it’s required for the court procedure.
(b) Notification to the client
A notification must be given to the consumer indicating that the consumer has applied for Debt Review.
(c) The Fees that are charged for the Debt Counselling procedure are set by the NCR;
Q&A:
Can both spouses be placed under the same Debt Review Application?
“Yes, and on condition that both names appear on all documentation and there is consent by both parties.” That includes the documentation, listed below.
What happens if the consumer’s are married in community of property yet the one spouse does not consent to the Debt Review?
“Because the Debt Review lists the consumer on all 10 (ten) national Credit Bureaus, it will have an effect on the common estate and therefore it is advisable that consent is received from the spouse. Both spouse’s income and expenses will be taken into consideration.”
If the consumer is married out of community of property, is the alternative spouse’s consent required?
“No, it’s not required as the consumer’s are married out of community of property, but the consumer’s expenses must be divided proportionally with his/her spouse’s if the spouse receives an income.”
What happens if the spouse’s are married out of community of property, but there is a property registered in both spouse’s names?
“Then the legal implication is that both spouses are to bring a joint application for Debt Review in order to have the property included in the Debt Review procedure.”
Step 2
Within 5 business days of consulting with the consumer, the following must be done:
(a) Form 17.1 must be sent to all credit providers.
Within 5 days of receiving the application for Debt Review, a Form 17.1 must be sent to all credit providers indicating to the credit providers that the client has applied for Debt Review.
On the Form 17.1 it will request all information that is required from the Credit provider in order for your proposals to be correct, for instance the product type, the account number, the capital outstanding, the interest per annum, the status of the account, the monthly instalment, the overdraft limit if applicable, the original term, the extended term if applicable, the insurance or assurance premiums if applicable, the credit life premiums and the monthly charges which include the costs and fees.
It will also refer the credit provider to Section 66 that clearly highlights the consumer’s credit rights. The Form 17.1 can be sent to the credit providers via e-mail or facsimile. Most Credit Providers have a Debt Counselling Department, and therefore all documentation and queries are centralized.
(b) Form 17.1 must be sent to all Credit Bureaus; (Debt Counsellor to log onto an internet website and register a consumer with the NCR, which then automatically sends the Form 17.1
to all Credit Bureaus.)
Q&A:
Must the consumer stop all his/her monthly instalments to the credit providers?
“Yes the consumer should stop all current monthly instalments and the Debt Counsellor must provide the consumer with a temporary restructured table of payments, in order for the consumer to immediately start paying the proposed restructured amounts.”
Must the consumer change his bank account?
“Yes, the consumer must change his bank account in order for existing debit orders to stop and create stability in the estate.”
Can the Credit Providers start legal action if a Form 17.1 has been delivered to him?
“No, in terms of the Act they are prohibited until the Debt Counsellor rejects the application or the court declares that the consumer is not over-indebted or the debt review process is uplifted in terms of Section 86(10).”
Step 3
Within 30 business days of consulting with the consumer the following must be done:
(a) Form 17.2 to all Credit Providers. Within 30 business days of consulting with the consumer, a Form 17.2 must be sent to all credit providers indicating to them of the finding of the debt counsellor.
(b) Form 17.2 to all Credit Bureaus;
The proposal must preferably be attached together with the Form 17.2 so that the credit providers can make the decision whether they accept the repayment amounts and repayment periods.
Necessary Living Expenditure (Groceries, transport, cell phone, rent, water & lights, clothing, school fees, aftercare, etc)
Restructured Table of creditors whereby the consumer’s instalments are shown as to the new monthly instalment and the new repayment period.
Drafted Consent order should the credit provider’s consent to the proposal.
Q&A
Which debt’s are allowed to be placed under the debt review?
“Only credit agreements whereby legal action has not commenced.”
When has legal action deemed to have commenced?
“When a summons has been issued and received by the consumer.”
What happens to these debts that have legal action against them?
“You will include these debts in your proposals as a statutory deduction if an emolument attachment order was granted or as an expense if a repayment offer was accepted.”
If the judgments are too high, what now?
“Then you will have to advise the consumer to acquire the services of an attorney in order to bring an application in court to minimize the monthly instalments of the judgment.
Can a consumer be placed under debt review if he/she is under administration?
“Legally yes, but it should not be necessary as he/she was not suppose to acquire additional credit whilst under administration. There can be exceptional circumstances where it will be necessary.”
Can a consumer be placed under debt review and administration at the same time?
“Yes, due to the fact that judgment debts are not included in the debt review process and costs involved in applications to review emolument attachment orders (Section 65J) it may be cheaper to do one administration application to have a remedy for the high judgments and other debts that do not fall under the National Credit Act. It is important to make sure that both applications have the same information in the administration application provision would be made for all credit providers in the debt review process and vice versa.”
Step 4
Within 60 business days the following must be done:
(a) Consent Order must be obtained; – should all credit provider’s consent to the Debt Counsellor’s proposals, then the Debt Counsellor can approach the Tribunal or Magistrate’s Court in order to make the consent order an order of court.
(b) Court order to be obtained;
Should all credit providers not consent to the proposals then an attorney must bring a court
application.
Q&A
Why is the court application so important within 60 (sixty) days)?
“Because the Credit Provider can terminate the Debt Review in terms of Section 86(10) of the National Credit Act 32 of 2005.”
What happens when certain Credit Providers consent to the proposals, and the remaining credit providers do not consent or alternatively don’t reply to the Debt Counsellor’s proposals?
“Then a court application must still be brought in order to prevent any Credit Provider from terminating the debt review and place it in the court’s discretion to make an order.”
What happens when a Credit Provider does not accept the proposal, but the counter-proposal is acceptable to the consumer?
“In the court application an extra annexure will be incorporated with a table that will show the new repayment table.”
How must the Court Application be served?
“Most Credit providers have consented to the service of court documents via fax. Should you not be in possession of such a document/authorization from the credit provider, then the suggested manner of service would be via registered mail. (Section 168 NCA).”
How does the Debt Counsellor determine in which Magistrate’s Court the court application must be brought?
“The court where the consumer resides would be the correct court in which to bring a court application.
Step 5
Once the Court Order has been obtained, the following must be done:
(a) Delivery of the Consent Order/Court Order – Once the court order or the consent order has been obtained, then a copy of the court order/consent order must be sent to all credit providers.
(b) Notification to the Credit Bureaus – The Debt Counsellors must log onto the website and go to manage/register consumers. Once there, it will show an icon that will request that the Debt Counsellor to submit, “Formal debt-restructuring is completed, and a court order granted”.
(c) Payment through a Payment Distribution Agent – NCR has accredited PDA’s, (payment distribution agent). PDA will ensure that a debit/stop order facility or emolument attachment order is implemented, which will bring ease to the Debt Counsellors.
(d) Clearance Certificate – The Debt Counsellor must issue the clearance certificate once all debt has been fully paid. The website must also be updated stating that a clearance certificate has been issued.
Q&A
What happens when the consumer does not return to give further information to the debt counsellor?
“The Debt Counsellor can log onto the NCR website and once logged onto the website, click on the manage consumers. The options that are given is as follows:
Terminate the application
Withdraw consumer
Transfer consumer
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