If you find yourself regularly defaulting on
debt payments and are unable to meet your obligations to your creditors, you qualify to apply for
debt counseling. The new provision by the National Credit Regulator (NCR) of South Africa allows consumers’ debt to be reorganised by a counselor to make payments easier. The whole process should take 60 working days. Note: while being unable to make your debt payments makes you qualified to apply for debt, your application may be denied.
The first step in the debt counseling process is applying for the counseling. Form 16, or the debt review application form can be downloaded from the National Credit Regulator’s website by clicking
here. Completed and handed over with supporting documentation, the debt review process begins to determine whether you do in fact qualify for debt counseling.
During this process, no creditor can enter into litigation regarding money owed to them by you. Debt counseling can be applied for even if a creditor issues a Section 129 or 130 notice.
Once the application has been received, counselor informs the creditor of the review and gives the creditor has 5 working days to confirm all the account details with the counselor. Things such as outstanding balance, monthly repayments and interest are confirmed. After these 5 days, the creditor is reminded to give feedback and, if needed, a further 5 days are extended.
??Even without confirmation and feedback from the creditors, the counselor may continue with the review process. This process will determine if the consumer is over-indebted. After this has been determined and the application successful, the counselor continues by preparing a restructure of the debt to be proposed to the creditors. This is sent 25 working days after the application was received. The creditors then have 10 days to respond to the restructure, with a final 5 days extension grace period granted if needed.
Once the proposal is finalised, it’s sent to the Payment Distribution Agency where it is sent to the creditors. The matter is then set when the debt counselor gets the consent order, signed by the applicant. From then on, the restructure takes effect. All fees are then liable to the counselor (as a percentage of the restructuring debt repayment fees).