Whatshot
Legal Talk
Legal Talk
Author: Fawzia Khan
Date: 2013-02-07
Date: 2013-02-07
In this edition, we unpack the debt review process to see how it works. If you are over indebted, you (the consumer) can appoint a debt counsellor who will be able to assist you in structuring a payment plan and then negotiate on your behalf with your creditors for the acceptance of the new repayment plan.
The way in which it works is as follows. The debt counsellor appointed should be registered with the National Credit Regulator. He is entitled to charge a fee for his services but is not allowed to accept a fee from the credit provider. His fees should be determined and agreed upon at the outset before signing any documentation- [note it cannot go higher than the prescribed tariff amount].
The application to the debt counsellor is made in a prescribed form. Once the debt counsellor receives the application to be declared indebted, he must provide the consumer with proof of receipt of the application and is required to notify the consumer's credit providers as listed in the application, as well as every registered credit bureau that he has received the application.
The debt counsellor will need to review the consumer's financial position. The consumer is required to comply with all debt counsellor's reasonable requests and provide him with the information he requests, so that the debt counsellor is able to properly evaluate the extent of the consumer's indebtedness and to review the consumer's income and expenses.
The debt counsellor will then determine whether or not the consumer is indebted and will issue a proposal for acceptance by the credit provider.
The consumer must act in good faith both in the review of his indebtedness as well as in the subsequent negotiations to arrange for the re structuring of a payment plan. These proposals may not necessarily be accepted by the credit provider.
Sometimes the credit provider may make a counter- proposal before they are prepared to accept any new credit arrangement. The debt counsellor must inform the consumer of any such counter-proposals.
The proposal is then submitted to the magistrate's court for it to be converted to a consent order. This will allow the repayment arrangement to be enforced in a court of law. It's crucial that the consumer abides by the agreed repayment plan.
If not, then the credit provider will be allowed to terminate the proposal and institute legal action against the consumer for recovery the debt. Know your rights! Email fawzia@thelawdesk.co.za or call 031-5025670 for any legal assistance.
