DEBT

REHABILITATION

NEWS Hannatjie van der Merwe Attorneys News June 2016

In This Issue

Debt Review

2

OVER-INDEBTED? Unable to pay for food, school fees or transport?

Need to apply for loans to pay for monthly expenses?

Skipping or missing account/credit repayments?

Using loans to pay off other loans or credit?

Have credit agreements you cannot afford to repay?

Receiving notices from creditors for arrears?

Did you answer YES to any one or more of these questions?

You are NOT alone !You are NOT alone ! Over 11 million of 19 million credit active consumers are described as over-indebted as per the SA Human Rights Commission (SAHRC). With the falling Rand, interest rate increases as well as increases in essential living costs, the number of over-indebted consumers is envisaged to also increase. Despite the National Credit Act prohibiting reckless credit, some credit providers still give consumers credit recklessly and without complying with Law.

Take positive action NOW and address your financially stressed position

Get out of debt responsibility with a structured plan to repay credit agreements

Have your credit agreements and costs investigated by a professional registered Debt Counsellor

Become creditworthy again and able to manage your household income and expenses responsibly

WHY DEBT REVIEW To assist an over-indebted

consumer over a period of

financial embarrassment, without

the loss of assets and dignity.

This will afford the consumer a

“second” chance in order to

rehabilitate his/her debt obligations

by way of debt restructuring.

The purpose of the Act is to

promote and advance the social

and economic welfare and protect

consumers.

AFFORDABLE INSTALMENT WITH PROTECTION AND WITHOUT LOSS AND LEGAL ACTIONS UNTIL YOU ARE ON YOUR FEET

No More Debt Stress

No Need to Loose your Mind

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YOUR RIGHTS You have the RIGHT to:

Apply for credit and not to be

discriminated against

Receive contracts in an

understandable language

Afforded the right to know

details of information held by

a Credit Bureau

Protection against unfair

marketing practices and

reckless credit

Received documentation

when requested

Confidentiality and privacy

Apply for Debt Review and

re-arrangement in case of

over-indebtedness

Cooling off clause in terms

of case of leases and instal-

ment agreements at

locations other than busi-

ness

Right to receive statements

of accounts

WHAT IS DEBT REVIEW It is a legal solution in terms of the National Credit Act (NCA) to assist

consumers who are over-indebted to repay all their credit agreements

(accounts) responsibly, and have enough money available each month from

their monthly nett salaries to:

Buy essential groceries, meat, cleaning material, bread, milk, and

Pay for essential expenses such as, school fees, water & electricity,

clothes, transport (petrol, bus, taxi), policies (essentials insurance &

funeral), medicine (not covered by medical aid), TV licenses and cell

phone accounts

It is a legal process that assists a financially distressed consumer to reduce

each credit agreement’s monthly instalment and extend the original contract

period. This reduction (lowered instalment) of each credit agreement’s

original monthly instalment, means more money from a consumer’s monthly

net salary to be available in his/her bank which enables a consumer to buy

the essential monthly groceries and pay for the essential monthly expenses.

It also means that a consumer pays credit agreements back over a longer

period.

Debt repayment by debt review is ended, once a consumer is no longer over-

indebted or financially stressed and can manage his/her credit repayments

without a restructured plan. This is when all unsecured credit agreements

have been paid or in the event that a consumer can afford to repay his/her

original credit agreement instalments and there are no arrears. The

consumer is issued with a Clearance Certificate in proof and support that the

consumer is no longer over-indebted. The consumer’s credit bureaux

information must be immediately updated to reflect that the consumer

is clear and creditworthy again.

Debt Review protects consumers from legal action by creditors. No creditor is

by law allowed to take judgment against a consumer who is under debt

review, as long as the consumer complies with the debt review order and

restructured credit agreement instalments .

YOU CAN’T

FIGHT FOR YOUR

RIGHTS IF YOU

DON’T KNOW

WHAT THEY ARE JOHN ROBERTS

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DEBT REVIEW IN PRACTICE

Step 1 You will start paying your restructured instalments immediately in order to

prevent further default and prevent termination by Credit Providers

Your Debt Counsellor will advise you which accredited PDA to make your

payment to and provide you with a proposal, stipulating what your monthly

payment will be and how it will be distributed amongst your credit providers by

the PDA. The best way to make a payment is by way of Stop Order.

Step 2 Because you are in default (paying a lesser amount than original instalment),

credit providers and collection agents will keep on “harassing” you at first,

until the Court Order is granted…DO NOT PANNIC…..remind them of the

Debt Review and ask them to contact your Debt Counsellor. NO Credit Pro-

vider may take legal action against you whilst the Debt Review is pend-

ing and you are paying the restructured amount.

Interest will not stop accruing on your accounts, it may even be more because

you are in default. When the Court Order is granted, the new interest rates as

negotiated by your Debt Counsellor will become effective.

Step 3 You have to make sure you get your monthly statements from your Credit

Providers and your distribution statement from your Debt Counsellor, to

monitor the progress on the accounts. If these statements do not correlate

with each other, immediately notify your Debt Counsellor to follow up and in-

vestigate.

If you do receive any letter of demand or Court Documents from your Credit

Providers, you have to contact and hand it over to your Debt Counsellor

IMMEDIATELY to take counter action against them.

DEBT REVIEW PROCESS When a Consumer realize he/

she is over-indebted or

received a letter of demand

(Sec 129 letter) from a

Creditor, he/she may go to a

Registered Debt Counsellor

(DC) and apply for Debt

Review

The Debt Counsellor will then

evaluate all the information

provided, make a

determination, and advise the

consumer

If a consumer is over-indebted,

the Debt Counsellor will

restructure the installments to

the maximum affordable

amount, and notify the Credit

Bureaus and the Credit

Providers thereof

For the following 60 days, the

Debt Counsellor negotiate with

the Credit Providers

No Credit Provider may take

any further legal steps to

collect from the Consumer

during this 60 days

The Debt Counsellor have to refer the matter to the Court within the 60 days to get a Debt Counselling Order, making the restructuring final.

Relieved

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WHO’S DOING WHAT?

The DEBT COUNSELLOR is responsible for the consumers Debt

Review process and aftercare: negotiations, credit provider details

and balances, statements, court orders, clearance certificate etc

The CREDIT PROVIDER is supposed to provide the correct

information on the accounts to the Debt Counsellor, negotiate in good

faith, and provide the consumer with monthly statements on their ac-

counts

The PDA (Payment Distribution Agency) receives the consumer’s

funds, distributed the money as instructed by the Debt Counsellor and

provide the distribution statement to the Debt Counsellor or Consumer

The CREDIT OMBUD deals with credit related complaints as it is

required.

Be Informed

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Who need to apply for Debt Who need to apply for Debt Review?Review?

Consumers who are over-indebted need to apply or

consumers who are financially stressed need to apply

for debt review. Also consumers who have received a

Letter Of Demand from a credit provider or a letter

which is referred to as a Section 129 Letter, which

advises the consumer to see a Debt Counsellor or to

contact the creditor to make arrangements.

Consumers married in community of property apply

jointly, while consumers married out of community of

property can apply as individuals. The NCA stipulate

that the total household income must be taken into

account., meaning that even if the one spouse are not

over-indebted whilst the other spouse is, the other

spouses’ income must be taken into account when

over-indebtedness are assessed.

When is a consumer When is a consumer overover--indebted?indebted?

If a consumer is not able to pay all the credit agree-

ments debit/ stop orders or credit agreements with his/

her salary. Some accounts are left unpaid and debit

orders are being returned by the bank, whilst there is no

money to pay electricity, school fees, transport or buy

food.

FAQ’s

If a consumer is not able to pay for essential expenses

such as food, school fees, transport, insurance, after all

the credit agreements instalments and debit/ stop

orders have gone off from the consumer’s bank.

Indicating that his/her salary is not enough to pay credit

agreements. When there is little or not enough money

left to pay electricity, school fees, transport or buy food.

Consumers tend to borrow more money to pay for

electricity, school fees, transport or buy food. This

symptom is usually exhibited by pay-day loans as the

consumer use credit to buy food and pay for transport.

In short over-indebtedness means that a

consumer’s credit repayment instalments are:

More than his/her income, or

Are so much that there is not enough money left to

buy food and pay for essential monthly expenses.

Once a consumer start to behave or experience the

above symptoms, the consumer must seek the

assistance and protection of a legal solution such as

that which Debt Review offers.

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Who need to apply for Who need to apply for Debt Review?Debt Review?

Several reasons exists why consumers find

themselves in financial trouble and each

consumer’s situation and circumstances are as

unique as the individual him or herself.

Experience and research have revealed a

great variety and unique combination of

causes for consumer over-indebtedness.

Some of the main reasons of

over-indebtedness can be summarized as:

Loss of Household Income as result of

Retrenchment

Death

Pension

Divorce

Loss in Overtime/ Production Bonuses &

Special Bonuses/ 13th cheques

Employer restructuring/ Employment

industry changes

Increase in Essential Living Expenses due to:

Increase in food prices

Increase in transport costs (Fuel/ Bus/

Taxi)

Increase in water & electricity rates

Increase in Banking fees

TODAY KNOWLEDGE

HAS POWER. IT

CONTROLS ACCESS

TO OPPORTUNITY

AND ADVANCEMENT. PETER DRUCKER

Additional essential expenses previously not

budgeted for such as:

School fees & Clothes

New Baby

New home and associated maintenance

expenses.

Relocation expenses

Increase in Credit Cost due to:

Increase in interest rates on loan accounts

Increase in Credit Life Policy taken out

with the loan

Increase in monthly service fees of loan

Medical Expenses as result of:

Medicine and/or procedures not covered

by medical aid

No Medical Aid

Inability to Budget/ Control Spending

Consumers do not keep track of how they

spend their money, and use ATM slips as only

confirmation of “ Yes you still have money left”

or “ No more money”, without paying attention

and budget for what is needed until month end

or what money had already been spend. Very

few people are thought how to budget prior to

finishing school or starting to work, earning

their own income. The result is that consumers

do not monitor how money is spend or ending

up in over-indebtedness, major stress, even

depression.

Contact Us

www.hvdmattorneys.co.za

0861 483 677

info@hvmgroup.co.za

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