Healthy Debt Assessment, protect yourself

It has come to light in a recent NCR workshop, that we are struggling with unregistered Debt Mediators and ADRA agents.

“This is a type of unregulated debt counselling where the person offering the service is not registered with the NCR, the proposals to creditors are declined because it is not a registered debt counsellor these matters also never go to court to offer the consumer legal protection as per the NCA. Many of these operations are outright scams designed to fleece consumers of their money. The NCR and Debt Counsellors are very against such scams and abuses that is causing more damage to the consumer’s financial affairs with the real threats of legal action and repossession of assets.

Part of the problem is that these so called ‘Debt Mediators’ have been trying to hide under the banner of Alternative Dispute Resolution Agents (ADRAs). This is a provision in the National Credit Act (NCA) which allows for consumers to make use of the registered services of someone who will help them with a specific type of dispute.” DebtFreeDigi 2017

In this BLOG we will aim to clarify what to look out for when applying for Debt counselling and how to make sure you are getting help from a registered Debt Counsellor.

Debt Mediation can help you when for example: if you have an account been paid off but the creditors come back and says there is still interest outstanding, which means the account hasn’t been fully paid off, and the dispute arise when the creditors will not send you the letter of proof that the account has been paid up.

This is then referred to as a dispute and is referred to a Debt Mediator or ADRA, these people are not allowed to collect any money. The dispute is sent to the NCT (National Consumer Tribunal) who will investigate the case of the dispute make their ruling on the finding of the information before the Tribunal.

As CONSUMER you must be very careful of who will be restructuring your debt. There doesn’t exist such a thing as paying 50% of debt repayments per month and getting 0% interest on restructured debt. There is no assessment to assess over-indebtedness and what you can afford to pay towards your creditors. These unregistered debt mediators do not even do reckless lending investigations, debt you were granted by a creditor and did not qualify for that credit or did not understand what you were signing. They can’t perform the duties of the debt counsellor as they are not registered with the National Credit Regulator, have no mandate to collect money from consumer via a registered PDA, and payments made to creditors and other fees made only by the registered PDA.

Here is the true facts that you should know:

Only a Registered Debt Counsellor can do an assessment to declare if you are over-indebted, interact with the credit providers, collect the COB’s (certificate of balances) that will inform the debt counsellor of the monthly service fees, credit life insurance monthly payment, interest rate and when your account went into arrears and the date of inception of the credit agreement before your debt can be restructured. By doing an over-indebted assessment there is a number of factors the debt counsellor need to compile to do a thorough assessment whether you are over-indebted or not.

Doing an assessment is not a simple process it takes a well trained and experienced registered professional to do such a finding and declare the finding of your circumstances with the NCR (ncrdebthelp portal), because you are over-indebted and you can’t afford to pay your contractual debt repayments every month. Therefore the information gathered during the assessment appointment the debt counsellor can then start the negotiations process with the creditors and motivating your situation when counter offers are received during this process the debt counsellor can negotiate for lower interest rates and receive these CONSENT agreements in writing which forms part of the documents placed before the Magistrates court or the National Consumer Tribunal to obtain the consent order that amends your payment agreement of the creditor.

Remember the original contractual agreement remains in force until the debt is fully paid, when you default in these payment agreements the creditor may terminate your debt review and proceed legally against you.

Taking all the above in mind, therefore no UNREGISTERED  debt counsellor may refer your matter to a Magistrates court or NCT as theses persons may not appear before the court or Tribual. The National Credit Act states that a debt review application MUST be referred to court or the Consumer Tribunal to make the new payment arrangement an order of the court or tribunal confirming the consumer is over-indebted.

Unregistered debt Mediators and or ADRA agent and their call centre operators calling consumer on leads that they purchase from lead generated companies as they have been mushrooming in South Africa, especially in Cape Town. When you understand the danger and the legal implication when you allow these unregulated companies to restructure your debt, collect fees for services rendered that your creditors will decline and refuse to issue COB’s as they are not registered debt counsellors leaves you in bigger panic and a very bad financial crisis that in most cases the registered debt counsellor is seen, most creditors have already issued summons excluding those credit agreements from debt review.

Go to  Register of registrants – debt counsellors registered with the NCR and monitored regularly by the NCR

On the 7th of march the NCR has visited our office to monitor our office and to ensure that we adhere to their policies and standards.

  1. Have a visible Debt Counsellor window decal.
  2. Have a visible Registration Certificate in Reception.
  3. Renewal fees for debt counsellor and office is paid in time and up to date.
  4. Quarterly stats are up to date showing the number of consumers seeking help.
  5. Debt Counsellor is operating from an office, and consumer’s files is kept private and confidential from consumers visiting the debt counsellor.
  6. The Application form is completed
  7. All documents required is received, the debt counsellor loaded the consumer with a registered PDA,
  8. Debt Counsellor served the notice to creditors that the consumer applied for debt review and the debt counsellor is in the process doing the assessment whether the consumer is over-indebted,
  9. Should the consumer not be over-indebted that the consumer is withdrawn immediately and documents issued,
  10. Proposals sent out in time as prescribed by the NCR,
  11. Money is paid to a registered PDA,
  12. Debt counsellors may not collect money from consumer,
  13. Verify if the matter has been referred to court or NTC by the Debt Counsellor by the end of business day 60,
  14. Creditors served the notice of motion the matter has been referred to court with the case number and court date, legal fees paid to various parties.
  15. Consumer was issued a receipt of debt review.
  16. Consumer received a performa invoice for the cost of the application to court.
  17. Reckless lending investigation will be taken to court.
  18. Special power of attorney was served to all creditors to ensure stop/debit order was cancelled as the consumer will be paying a registered PDA going forward.
  19. Debt counsellor understand how to do proposal and the term to solve.
  20. The debt counsellor understands how to negotiate for reduced interest rates and when it can apply.
  21. Using the DCRS rules when doing proposals.

You would not go to a house builder or plumber to fix your car, would you? When it comes to your debt deal only with REGISTERED DEBT COUNSELORS visit the NCR link above and search to see whether the person wanting to help you is registered.