• What is the difference between Debt Counselling, administration and liquidation?
Debt Counselling is where a Debt Counsellor restructures instalments to allow the consumer to pay his or her debt and meet his/her basic living expenses. Debts are paid monthly.
Administration is a legal process, where the instalments are reduced, but creditors only receive payment every three months and the term of repayment is much longer than under Debt Counselling. Debt must be less than R50 000 to qualify.
Liquidation is a legal process where assets are sold to try and lessen the debt and the Court will appoint somebody to manage your finances. This is costly and you will be blacklisted for 30 years or until the Court declares you rehabilitated.
• Can I apply for credit while under Debt Review with a Debt Counsellor?
• Will I be blacklisted if I apply for Debt Review with a Debt Counsellor?
No. There is no black-listing but if the Debt Counsellor finds the consumer to be over-indebted, they will add a flag to the consumer’s credit record asking creditors not to lend the consumer money because he or she is already over-indebted. This will be removed once the debt has been repaid and when the consumer is no longer over-indebted.
• What proof will I have that I am under Debt Review?
You will be issued with a letter to this effect from the Debt Counsellor.
• Can I cancel my Debt Review at any time?
Yes, if you are unhappy with the Debt Counsellor or process or if you feel that you are able to manage your own financial situation.
• Can I still go under Debt Review if I have been black-listed by a creditor?
Yes, you can be placed under Debt Review at any time, provided a Debt Counsellor has declared you over-indebted.
• Must I continue to pay my accounts?
Yes, the creditors cannot take legal action for 60 business days after you apply for Debt Review but you must continue to make payments, because if your application is unsuccessful, you will be in default and the creditors can take legal action after those 60 business days.
• What happens if I receive a letter of demand?
You have less than 20 days to see a Debt Counsellor for help.
• Will the consumer still be able to use accounts and credit facilities?
No, once notification has been given to the credit providers, the accounts will be blocked from further use.
• What will happen if a creditor lends the consumer money while the consumer is under Debt Review?
The Debt Counsellor may refer the matter to court for a declaration of reckless lending and the court will then decide what action to take.
• What accounts can be included in a Debt Review process with a Debt Counsellor?
All credit agreements, including house bonds and vehicle finance loans can be included but not service agreements such as water and lights or cell phone accounts. Any accounts on which judgment has been taken cannot be included.
• Is there any way that my debt can be consolidated?
You can apply in conjunction with your Debt Counsellor for a consolidation loan to the relevant institutions but this tends to only be granted in extreme cases.
• Why can a Garnishee (Emolument Attachment Order) not be included?
It is already a Court Order and only a Court can make a change to a Court Order.
• If a consumer has additional cash, can the consumer pay the creditors directly?
No, there is a restructuring plan in place. The consumer must contact the Debt Counsellor to make arrangements.