Frequently Asked Questions
Any Questions?
Yes.
Interest is part of the contractual obligation you have entered into. While the NCA does not make provision for the debt counsellor to make changes to the interest rate, through negotiation with your credit providers we are often able to get very significant concessions on the interest rates.
Any concession on the interest rate is at the credit provider’s discretion.
No.
Prior to issuing summons the creditor MUST send a letter of demand in terms of Section 129 of the National Credit Act. In that letter you are given 10 days to consult a debt counsellor. If the credit provider does not receive an application for debt review and you make no other arrangement with the credit provider then they will instruct an attorney to issue summons. Once the summons has been served the debt cannot be placed under debt review. This does not preclude you from placing your remaining debt under debt review to try and free up money to make an arrangement on the debt which is now “legal”.
No.
The object of debt review is to become debt free so while you are under debt review you may not enter into any further credit agreements.
No.
You may not prefer one credit provider over another and you may not make use of any credit facilities whilst under debt review. Again, the object of debt review is to become debt free.
No.
A consolidation loan is a loan which is taken out to settle all your smaller existing debt. You then only have one large debt to repay. What happens in practice is that consolidation loans are taken out at the maximum interest rate, all existing debt is settled and a month or two later temptation sets in and the “settled” accounts all become active again and the balance owed creeps up and up and you land up with twice the amount of debt you had prior to taking the consolidation loan.
No.
Missing a payment is considered a default and your creditors may withdraw from the debt review process and cancel any concessions. This means you will go back to paying the full monthly instalment and the full interest rate or the creditor can proceed with legal action.
Yes.
Debt counselling fees are regulated by the National Credit Regulator. The fees are recovered from your monthly payments and are calculated into the restructured payment plan. Once you agree to continue with the process there is an initial fee of R350+VAT (R402.50) to cover the administration costs of credit checks etc. The Debt Counselling fee and legal fee are recovered from your monthly payment.
Yes and no.
These are not credit agreements and are generally not included in the debt restructuring plan. They are budgeted for as part of your living expenses. If, however the agency collecting the debt agrees to include the debt in the repayment plan then, and only then, can these accounts be included in the debt restructuring.
Credit agreements often have credit life insurance included in your monthly instalment. Depending on the policy this often covers retrenchment, death and critical illness with different cover options. Where the linked insurance is excessively expensive we offer an alternative product through One Sure to reduce the amount you are paying on insurance. If you have no linked insurance you can take out new cover.
You can only withdraw from the process before the debt counsellor confirms to your credit providers that you are over-indebted. From date of signing the application you have a 5 day window to withdraw. Once you are declared over-indebted and before a debt -restructuring order is granted, you need a court order to declare that you are no longer over-indebted. Once a court order restructuring your debt is granted you need a clearance certificate to exit debt review.
No.
Clearance can be issued once all your short term debt has been settled and if your debt review payments on your home loan are up to date.
Administration is for debtors with less than R50 000 worth of debt. Home loans and vehicle finance cannot be placed under Administration. Judgment debt can be placed under Administration but not under debt review. Administrator’s fees are not regulated and payments to credit providers are made quarterly not monthly. No negotiation is entered into with your credit providers when placing debt under administration.