A study done by the University of Pretoria and the National Credit Regulator (NCR) shows some of the shortcomings of the
debt counseling process and the debt restructuring process. The 330-page report identified the parties responsible for delays in the process.
According to senior manager: education and strategy Peter Setou noted that there are too many instances of the debt restructuring process not being successfully achieved. The applications, he told
Bizcommunity, are not being processed quickly or smoothly. The study also cites poor cooperation between creditors and debt counsellors as one of the factors influencing the process.
To resolve the problems facing the NCR and debt counselors, the study makes certain recommendations, such as better training of debt counselors, better communication between counsellors and creditors, establishing an ombudsman for the debt review process and standardising the format of evaluating the restructuring of debt.
The
debt counseling process is a lengthy process, which is further hindered by poor processes. At present, the process begins with the application (which if rejected must be paid for at R300). If an application with the supporting documentation is accepted, the debt review process begins whereby the counselor determines how indebted the consumer is. The debt is then restructured with creditors for easier payment terms.
The final proposal is then sent to the Payment Distribution Agency which is then sent to the creditors. The counselor then gets paid a percentage of the fees of the debt to be repaid.