Debt Review Removal Scams

In this week’s blog, we at Consumer Debt Support (CDS) would like to share more on the topic, and warn our consumers to be aware of the scammers out there, attempting to steal your money with unlawful promises, that they can remove your name and status from debt review system.

What does the term Debt Review actually mean? To elaborate on the topic, Debt Review means that you as the concerned consumer, visits the offices of a Registered Debt Counselor who will review your debt situation, with a fully detailed debt assessment on your budget, to determine if you are over-indebted, and the process thereafter to assist by law, to become debt free again!

These scammers advertise that they can remove your debt review status from your name. By law, the Amendment Bill of the National Credit Act (NCA) of 15 March 2015, prohibits any person or debt counselor from just removing a consumer out of the debt counselling program. The following conditions apply:

  1. The consumer that has a legal debt review consent order, can exit only by the following factors:
  • Being declared no longer over-indebted, the court order to be rescinded (set aside).
  • All the debt must be fully paid up with proof.
  • All the unsecured debt including the vehicle are paid up, and there are no contractual arrears on the home loan. Only then, the debt counselor may exit the consumer by means of a legal clearance certificate.All National Consumer Tribunal (NCT) court orders are equal to High court orders, the consumer can only exit the Debt Review Program when all the debt is settled, with the exception of the home loan as stated above.
  1. The consumer can exit the debt review program before the court order is granted, on the advice of the debt counselor on the terms and conditions of the National Credit Act (NCA).

Scammers tend to profit of the uneducated consumers

Consumers are considered soft targets for these professional criminals, promising a quick fix and clean record, to exit the debt counselling program. Referring to actual cases that were reported and sent to our office, after which the consumer been informed, they have been victims of this scam.

Real problems these consumers are faced with are:

  1. The empty promise made that they can exit the debt rehabilitation program without a court order.
  2. They skip their payments to the Payment distribution agents (PDA’s) and default on their existing court orders or debt restructuring agreements set in court.
  3. The debt restructuring agreements at various creditors will then be terminated due to non-payment and legal action commences, placing these consumers in worse off situations. These creditors will enforce their rights, demanding all the arrears with interest, service fees, together with legal collection fees. Which makes it impossible for the consumers to settle all their debt.
  4. Debt restructuring consent orders are court orders, granted in a Magistrates Court in South Africa, and NCT orders are granted in the National Consumer Tribunal courts and equal to a High Court order.

 

Why are so many consumers not paying according to their debt restructuring program and default in debt counselling?

The most common answer we came across in the field, through our interviews, is that these consumers believe there are easier options for them, by applying for more credit to cover older debt. The misleading promises that their debt review can be cancelled.

This week’s blog shares a serious concern with our readers, that of unregistered companies, promise to remove the debt review flags or status, from credit bureaus and the NCR Debt Help System (DHS). Only a registered Debt counselor has access to any NCR Consumer information systems. It is not as easy as what is advertised and promised. Once payments are collected for these services, there is a growing hope that the need to access more credit will become a reality.

The few consumers we have interacted with, was angry, confused and could not believe this happened to them. They trusted those companies and honestly believed with their follow ups that they would get feedback on the service they paid for. We at CDS deal with these problems on a weekly basis, and we help consumers to get back into the debt counselling program.

We do understand the need of our consumers, when entering the debt review program, to assess their over-indebted status. A beginning of a new road and process to become debt free and follow the dream of achieving the freedom to living debt free.

Visit our website and read our other blogs from the pen of the author Annienne Nel  http://www.debtcentre.co.za

 

Conclusion:

Take a look back at the time when you have started the Debt Counselling program. Remember how difficult it was five years before you took that step. Imagine now that you adhere to the program, and in five years from now you will be done with all your old debt. Once achieving this goal uninterrupted, only then you can re-enter the credit market again, applying for a house or a car loan. CDS can only educate you all on the topics and stress the pitfalls when you do not follow the program. We strive to prevent more damage to the credit worthiness of our clients, prolonging the pain of struggling to get rid of their old debt.

 

Note from the Author Annienne Nel

As a concerned Debt Counselor, I come across numerous cases of possible fraud in our industry. I find the need to express my take on the seriousness of unregistered companies and fly by night people, who can convince consumers to trust them with their personal detail and debt, just for them to end up in more unaware financial trouble as before. Protect yourself by verifying if the Debt Counselor you approach, is registered with the NCR, with the valid legal certificate as proof.

To verify the status of the company or individual you are dealing with to solve your debt problems visit http://www.ncr.org.za/register_of_registrants/index.html