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SILVER CLINIC | I am drowning in debt. Should I administer, review or consolidate?

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Debt review is not a one-size-fits-all solution and it is a process that should be approached by a properly registered debt counselor.

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A desperate Fin24 reader who can’t afford to pay off their debt turns to an expert for advice on what options are available and what they mean.

He writes:

I have two loans to repay. I cannot afford to pay them. What would you suggest: should I administer, review or consolidate? What are these things, by the way?

I am in urgent need of help because I am drowning in debt.

Renée Marais, registered and independent debt counselor with the NCR, answer:

When a consumer finds himself in a situation where paying down his debt becomes problematic, please consider the following options.

1. Make arrangements with credit providers affected by perhaps restructuring the credit agreement to reduce the payment and extend the term of the agreement.

2. Maybe review your budget to see if there is a way to reduce your monthly expenses.

3. Management

  • This is debt below the R80,000 threshold, but it is a process facilitated by an administrator and compromises the consumer’s business ability.
  • In this case, the legal status of the consumer is compromised, but it is a matter of the jurisdiction of the district court.
  • It is also a process that must be led by a lawyer.
  • In this case, payments are made to the administrator who then pays the debt.
  • There are fees involved.
  • The process should be explained to you at the first point of contact.

4. Sequestration

  • This is another option, but in this case the court also appoints a trustee, and the consumer’s business capacity is also impaired.
  • These are High Court cases and will impact your legal status, and as such, a certificate of rehabilitation is required to exit after the prescribed time limit.
  • This process is carried out by a lawyer.
  • Payments are made to the appointed curator who remunerates the credit providers.
  • Charges are also part of the process and should be explained to you during the first point of contact.

5. Debt review

  • It does not undermine a consumer’s business ability and in this case, consumers remain fully responsible for all decisions and debt payment.
  • A debt counselor cannot be paid directly by the consumer for distributing payments to credit providers.
  • The national credit law provides two ways of paying credit providers: one is for a consumer to make payments directly according to the arrangement confirmed by the court for the restructuring of existing debt, and the other is to ” use a PDA (Payment Distribution Agent).
  • A consumer is not required to use a PDA and cannot be forced to do so.

A consumer can only quit the debt review in the following ways:

I. Before Notice 17.2 (which informs all parties of the debt review process) is issued, the consumer can advise the debt counselor that they do not wish to proceed. There is a cancellation fee of R650 and an administration fee to pay. Cancellation must be made within 20 days of the date of signing form 16 (request form).

ii. If the debt counselor issues Form 17.2, there are only two ways out:

1. If you have paid all debts and obtained a clearance certificate;

2. If you prove to the court that you do not need a debt review and that your debt is 100% up to date with the original credit agreements, the court may find that you are not. over-indebted and reject the application for debt review.

iii. If you have a debt review order, you can only exit if one of the following occurs:

1. You pay off all debts in full according to the order, can prove it to the debt counselor (the same applies to prescribed debts), you can get a clearance certificate.

2. If there is a material defect in the Magistrate Court’s debt review order, the order may be reviewed by the High Court, but this is a legal matter and cannot be made. than by a lawyer.

3. If there is a material flaw in the National Consumer Court’s debt review order, you can either appeal to a full NCT bench or submit the NCT order for review by the High Court. This is again a legal matter and can only be done by a lawyer.

Debt review is not a one-size-fits-all solution and it is a process that should be handled by a properly registered Debt Advisor (DC).

  • The opinion is as a debt advisor in the industry since July 2010 and should not be construed as legal advice. You can access more information about the debt review on the NCR website www.ncr.org.za or contact a lawyer for legal advice.

– Renée Marais, Independent Debt Advisor, NCRDC1780 Pretoria

Questions can be edited for brevity and clarity.