Can I still rent property if I am under debt restructuring?

The GOOD NEWS is: you can!!

Renting a property is still possible while under debt review.. Just make sure it is within your means and affordable. As debt review is not a credit agreement itself, clients can still rent affordable property while under the program.

WE at Consumer Debt Support (CDS) can provide the landlord or letting agent with proof of a budget and allowance for the rental amount, which most agents accept.

This allows CDS to best fulfill our obligation towards the consumer’s budget duties while ensuring affordability.

When entering a rental agreement it is important to understand it is a service agreement between yourself and lessor or landlord.

In most cases the agent is employed by the lessor or landlord to fulfill the mandate to find suitable tenants for their property and ensure all the criteria is met, clean ITC, no black-listing and good references with proof of income.

Many real estate agents do not understand the National Credit Act (NCA), neither do they realise that according to the NCA a consumer may not be discriminated against while under or after debt review.

The fact is: a debt review is not a credit agreement itself, but an agreement where creditors agreed to accept lower affordable payments.

These payments are  restructured into a new payment plan that is then made a restructured consent order by a Magistrates court or the National Consumer Tribunal.

Debt review flagging on the ITC is not black-listing, or a stigma branding and may not be used against a consumer for the sake of a rental agreement.

The purpose of the flag is to ensure that registered credit providers do not grant the consumer further credit on loans, credit cards, overdrafts and so on…

Do not hesitate to contact us if an agent tells you you can’t rent.

When my debt review application is successful and the assessment shows I am over-indebted, will I be able to apply for a new loan or credit card?

No. You will not be able to open a new account with any creditor, your ITC will be marked with a flag notifying all creditors that you are over-indebted. It means you can’t pay your existing debt and applied for debt review with a registered debt counsellor.

Once the consumer’s debt is paid up in full and settled in debt review, and the debt counsellor issue the clearance certificate and clear all the negative information and any flags “debt restructuring / debt review / debt restructuring consent order” off the ITC record, and all the consumers creditors issued the debt counsellor with paid up letters. Now the consumer may re-enter the credit market.

When applying for debt review and the consumer no longer have access to his credit card or overdraft does it mean he will not have access to the bank debit card?

Once the consumer applied for debt review, it does not affect any savings account with a linked debit card. When one needs to pay for groceries or other things you buy in the shops the debit card is very handy instead of walking around with pockets filled with cash money and the risk of being robbed is minimised.  When there is plans to travel international or national the debit card is great to cover vehicle rental costs or any other costs that is service agreements. Talk to your banker when travelling to ensure the account is linked to an international debit card service.

When a consumer applies for debt review and the accounts have been referred to a lawyer for legal collection, can the account or accounts be entered into debt review?

This is a question asked with every new application. The NCA (National Credit Act) states that any credit agreement or debt account must be excluded from debt review only if the CP (credit provider) has commenced with legal proceedings meaning issued the consumer with a summons stamped by a magistrate’s court or high court to enforce their contractual rights. Therefore, in short, if the legal company has not sent a sheriff that served the consumer with a summons, the account can be included into debt review.

Another concern from consumers applying for debt review, is when they received the notice of default and the 10 days have lapsed can they include that account in debt review.

The Notice of default Section 129 notice must be sent as per the NCA (National Credit Act), by registered mail to the correct residential address of the consumer in default. The creditor may not proceed with legal action if this letter was not sent to the debtor (consumer) when in default of a credit agreement. As per the amendment bill of 15 March 2015, if the creditor referred the outstanding account to their lawyers and the lawyers had not issued a summons to the consumer, the account is eligible for inclusion into debt review.

May any creditors refuse to accept the debt review?

In South Africa, we have the best National Credit Act that protects consumers who can no longer pay their debt. Let’s look at the Section 86(5) and Sections 86(7) of the NCA that legally enforces any registered credit provider to participate in the debt review process. The registered debt counsellor has a roll and mandate to fulfill, therefore must show the consumer is over-indebted. If the creditor had already referred the outstanding debt to their legal team, who had not approached the court and issued the consumer with a summons, then the debt can be included into debt review. The creditors may not discriminate against any consumer living who is a citizen of South Africa and who can no longer pay their monthly contractual debt obligations on debt they owe their registered credit providers.

Doctor’s bills fall into the category of incidental credit agreements and may be included into debt review.

When married in community of property and only one person has debt, can he or she apply for debt review without their spouse?

Married in community in property means the debt is jointly both persons responsibility whether one made the debt or not. The debt review application is a legal process, the legal status of the marriage is then taken into account which means both husband and wife will form part the process to seek the help of a registered debt counsellor.

So, the answer is No. The consumer can’t apply for a single application without the other party being part of such a debt review.

When married out of community of property, how does it affect the person that is not in financial trouble?

Being married Out of Community of property means that the person struggling to pay their creditors may alone apply for a debt review application. In other words, it can be a single application. The debt counsellor will ask for the portion of contribution towards the joint household expenses when doing the assessment (groceries, etc. The portion of the spouse contribution to pay toward the stuff that is not debt repayments).

Having a home loan is in a joint name, then the rule apply that both husband and wife married out of community of property will then apply for debt review.

What happens in the event of death of one of the applicants in debt review before or after the debt restructuring order was granted?

In the event of death, the registered debt counsellor will request the death certificate and inform all the creditors of the change of circumstances. The applicant or co-applicant in such a case will most likely not be able to pay the debt review going forward. It is important to inform the debt counsellor as soon as possible with the information of the person who will be dealing with the estate late. Once all the debt is paid up by the executor appointed by the Master of the High Court, the debt counsellor will issue the clearance certificate in the name of the widow or widower to ensure the credit bureaus and the NCR database is updated so that he or she can re-enter the credit market.

What happens if the debt counsellor does not communicate with the consumer after entering the debt review process? Consumers hear negative stories from friends, here is the best guidance how to deal with such a problem.

It is important to deal with registered debt counsellors only, also reminding oneself it becomes the applicant’s responsibility to ensure the debt counsellor is registered with the NCR. Should the debt counsellor not make contact with a consumer or respond to emails regarding the debt review progress, the consumer may complain with the NCR.

Go to: http://www.ncr.org.za/register_of_registrants/index.html , and check out if your debt counsellor is registered and in good standing with the NCR.

What happens to my debt review should my employer retrench me?

Here at CDS we urge our clients to get an income protector in place that will pay temporary income during unforeseen circumstances that may occur. We have found creditors are humans with hearts and their debt review staff will do their utmost best to assist in any situation that’s brought to their attention. The final outcome and discretion remains the sole decision of the creditor how they will deal with retrenchment, or any other sudden loss of income due to various unforeseen circumstances.