While debt review can be a lifeline for an over-indebted consumer, it should not be entered into lightly.
You need to be aware that once you enter debt review, you cannot apply for new credit, and you cannot exit debt review until all your debts are settled.
There is no process in the National Credit Act (NCA) that enables voluntary withdrawal from the debt review process after you have applied for debt review in the prescribed manner and form.
This is according to the updated National Credit Regulator (NCR) Debt Review Withdrawal Guidelines which were issued recently. This follows a high court ruling in 2019 that clarified that if you were overindebted and entered debt review, you had to settle all your debts that were included in the court order, apart from your mortgage.
Even if your circumstances change, and you can afford to resume the original repayments, your only option is to accelerate your repayments to settle the debts sooner.
Many consumers find themselves under debt review without fully understanding the implications. We receive many complaints from people who believe they have been put under debt review without their consent.
Misleading information from call centre agents
If you are contacted by a debt counselling call centre and you never actually signed anything, then you can lodge a complaint with the NCR. If, however, you signed Form 16, then you effectively gave the debt counsellor permission to obtain all your credit details and set the process in motion.
“There are thousands of people trapped under debt review due to call centre agents contacting them,” says debt counselor Corné Myles, who says that organisations digitalise the forms on WhatsApp and can generate Form 16 at the push of a button.
“Consumers have no idea. They think it is an assessment but once they agree, Form 17.1 is issued within five days to get a certificate of balance, then they send out Form 17.2 and you are now under debt review,” says Myles.
As the NCR explains, debt counselling is a statutory process and has prescribed timelines that must be adhered to. Someone is under debt review when they have applied for debt review in the prescribed manner, which means the completion of Form 16 and provision of the required information.
While the NCA requires debt counsellors to advise consumers of the entire process before the application is completed, many call centres do not fully explain the process to consumers.
They are also in contravention of the NCA, as only qualified debt counsellors – not call centre agents – may advise consumers on debt review.
Debt review advertised as debt consolidation
Moreover, many unscrupulous debt counsellors tell consumers that they are offering “debt consolidation” and market their services as just simplifying your debts into one payment. Yet once you sign Form 16, the debt review process is trigerred.
The NCR explains that within five days of receipt of the application, the debt counsellor must notify the credit providers by means of Form 17.1. Your accounts will now be flagged.
The next step is for the debt counsellor to determine whether you are over-indebted. If you are not over-indebted, the creditors will be notified and the flag dropped. If, however, you are determined to be over-indebted, the debt counsellor has an obligation to discuss the terms of the repayment plan with you before it is finalised.
The debt counsellor issues Form 17.2 to credit providers and updates the credit bureaus via the NCR’s Debt Help System (DHS). You are now fully under debt review.
The Magistrate Court is required to grant a debt re-arrangement order. However, the debt review will commence prior to the Magistrate issuing the court order.
What is not clear is whether a consumer has the option to halt the process before Form 17.2 is issued, which happens withing five to ten days.
Myles says that a good debt counsellor will first discuss the repayment quote and give the consumer a chance to opt out, but many debt counsellors do not.
“They skip the step and run like the wind with Form 16 to get to 17.2 so they can receive that first payment.”
The problem with the current NCA regulations is that there is no requirement for the consumer to reconfirm in writing their decision to proceed before Form 17.2 is issued.
Once a debt counsellor has found that you are over-indebted and issued a Form 17.2, the Magistrate Court is required make an order as contemplated in section 87 of the NCA. The only way to exit debt review at this stage is to present additional facts to the Magistrates Court.
This means that you must present to the Magistrates Court new or additional facts to support the fact that you are not over-indebted and that you are able to pay contractual repayments, including any arrears that exist at that point in time.
If the Magistrates Court finds that you are over-indebted, the debt review process continues, and you cannot withdraw from debt review.
The only way to end or exit debt review is in terms of section 71, through the issuance of a clearance certificate by a debt counsellor once the all the substantive and procedural statutory requirements have been met.
Lodging a complaint
If you have been put under debt review without due process, you can lodge a complaint with the NCR, which commits to resolving complaints within 90 days depending on the complexity and nature of the complaint. If the NCR finds that the correct debt review process was not followed, the debt review process will end and the listing on the credit bureaus removed.
If your debt counsellor is not assisting you, or not providing you with required information, you can also lodge a complaint at the NCR.
A common complaint is that the Payment Distribution Agency (PDA) statements do not match the credit providers’ statements. By law the credit provider must send the client their monthly statement. The onus is on the client to compare these statements with the PDA statement and query any discrepancy with the debt counsellor.
In some cases, credit providers have included fees on the statement that were not part of the court agreement.
Transferring to a new debt counsellor
You can transfer to another registered debt counsellor at any stage during the debt review process. When a consumer is transferred the following applies:
- The debt review process does not start afresh. The transferring debt counsellor must supply all relevant documents to the receiving debt counsellor upon transfer.
- The receiving debt counselor may not charge a new application fee, administration fee, restructuring fee or legal fee if these fees were already paid by the consumer to the previous debt counsellor.
- An after-care fee can only be charged by the receiving debt counsellor from the date of transfer.
- A consumer is required to pay all outstanding debt counselling fees for work actually completed up to the date of transfer before the transfer date.
If you stop paying, a debt counsellor could withdraw or suspend their debt counselling services. This does not mean you are out of debt review, however. To suspend services, the debt counsellor will submit Form 17W(b) to all credit providers and update the DHS to reflect the suspension of services. For the duration of the suspension, you will remain on the same DHS status that was applicable at the time of suspension. In other words, you will remain under debt review.
Exiting debt review
It is important to note that there are unscrupulous fraudsters advertising that they can assist with exiting debt review. They cannot. The only way for you to exit debt review is to demonstrate to your debt counsellor that all obligations under all credit agreements (excluding a mortgage) have been paid in full. Then your debt counsellor may issue a Form 19 clearance certificate.
If you elect to pay your credit providers directly (i.e. not via the PDA), you will remain under debt review and will have to provide paid-up letters to your debt counsellor when requesting a clearance certificate.
You cannot be under debt review without a debt counsellor. You remain liable for payment of debt counselling fees as set out in the NCR Debt Counselling Fee Guidelines for work actually completed. The only way that you can have your debt review status removed from the credit bureaus is to make payment of the full outstanding amount owing on the terminated credit agreement(s), excluding any previous concessions.
This article first appeared in City Press.
Hi i was first told by the debt councillor that they will assist me with debt consolidation and later they tod me that i dont qualify but i qulify for debt review which is the same thing but not a loan they will reduce my instalments then he sends me forms i completed the forms and send back later on my friend explained to me about the debt review then i ask him to cancel it because i never even pay them , then i was told that im alredy in i cant go out , i loged a complain with NCR but they keep onsaying the matter is under incestigation but they already got a feedback from the debt councillor what is taking so long and why
Sadly the NCR is extremely slow at resolving these issues. I have a case where someone was illegally put into debt review – he was not overindebted – it has been months and the NCR has not resolved it yet. The problem is that the law says that if you are found to be overindebted (form 17.2), you cannot exit debt review. The only option now is to prove to the magistrate (when they apply for the court order) that you are not overindebted. Who is the debt counsellor?
Hi
I signed an application yesterday to go under debt review but I have a feeling the company is not legit can I get out of it
you can check on the NCR website to see if they are registered https://ncr.org.za/register_of_registrants/index.html
You can inform them you no longer wish to go ahead – but sometimes the more unscrupulous ones rush the application through
Hi Maya,
I am in a situation where my creditor, Standard Bank has terminated my debt review due to the DC not replying to their counter offer within the 60 day period. My accounts are in arrears and increasing, with various debt collection attorneys contact me.
Only now a months after the 60 days, has the DC has responded with a counter proposal for reinstatement, and the Bank has responded with another counter, which I cannot afford.
No court application has been done. My DC says that I have to accept.
The DC has been been totally incompetent which has landed me in this situation, and transferring to another DC at this stage is risky.
Please advise.
Thanks
It sounds like your DC has dropped the ball. If you genuinely cannot afford the repayments then the court could force Standard bank to accept the offer – but you need to get to court.
Hi Maya, DebtSafe flagged me without my consent. Was a canvassed call from them. The form is fraudulent, and they say was telephonic agreement. Someone has forged signature and 3 different handwritings on forms 16. NCR can’t assist. I went to Transunion, and I have no debt at all. NCR are in cahoots with them as the director at DebtSafe seems to be on their board. NCR said the for 16Appears to be legit. Can’t be certain and it’s so dodgy not signed by Councilor who has since left. DebtSafe have promised to send a clearance certificate as they said they would do if I could prove I had no debt. They now ignoring all and so is NCR. Can I go to the magistrate’s court and resolve as no one is listening. DebtSafe have so many complaints of Fraud listed to them on Hello Peter. Before they sent the form 17. They wanted an admin fee and that’s when I figured they had flagged me, and I told them prior to that when they asked for Debit order to be signed that I never consented to any DebtSafe. How can I resolve this as its blocking me from purchasing a car. No one can assist. It was also not made an order of Court. as they couldn’t do that without the Fee. When I notified them I had never signed up. Can i open case fraud at nearest Police station?
I am so sorry to hear this. I am getting so many complaints about other debt counsellors doing the same thing and we report to the NCR and hear NOTHING!
I am going to find out what other channels we can use
Hi Maya, DebtSafe flagged me without my consent. Was a canvassed call from them. The form is fraudulent, and they say was telephonic agreement. Someone has forged signature and 3 different handwritings on forms 16. NCR can’t assist. I went to Transunion, and I have no debt at all. NCR are in cahoots with them as the director at DebtSafe seems to be on their board. NCR said the for 16Appers to be legit. Can’t be certain and its so dodgy not signed by Councilor who has since left. DebtSafe have promised to send a clearance certificate as they said they would do if I could prove I had no debt. They now ignoring all and so is NCR. Can I go to the magistrate’s court and resolve as no one is listening. DebtSafe have so many complaints of Fraud listed to them on Hello Peter. Before they sent the form 17..They wanted an admin fee and that’s when I figured they had flagged me, and I told them prior to that when they asked for Debit order to be signed that I never consented to any DebtSafe. How can I resolve this as its blocking me from purchasing a car. No one can assist. Can i open case fraud at nearest Police station?
I did put you in contact with the NCR to lodge a complaint but not sure if you followed that route.
I signed a debit review not explained to me yesterday can I able to cancel it, because I don’t think I qualify..I only have 2 accounts and I can afford to pay them
please inform them immediately that you do not want to go ahead. They have to prove that you are over-indebted but that doesn’t stop some unscrupulous providers
Good evening
I had a call from debt counsellor. I know i was in the wrong by not asking my husband consent as they told me that they only assist with individuals and it will not hqve an impact on my husband.
Now my husband bank have red flagged him for Debt review as he did not give any consent for this
How do I fix it as they freezed my husband bank account because of my stupidity
Please help and advise me as to how can my husband get his credit back from the bank
It is a big problem once you have been flagged on the Debt Rules System. Who is the debt counsellor?
Hi Maya, I entered into debit review thinking that it was consolidating, I’ve been trying to exit but i see that its impossible according to the information from the internet, i have 5 accounts i am now left with 3 a loan , VAF and clothing account but I want to exit this thing i feel like my accounts are on the same amount so i paid off 2 while I am still under debt review all because I felt like I will never finish these accounts.
All you can do at this stage is to accelerate the payments and try end it sooner.
Hi I have signed form 16 online but not provide all info docs regarding payslip expenses to councelor they just went ahead and submit to ncr
This is happening a lot and is unethical. You should notify the NCR (they are not great at turnaround) but also try to inform the credit bureaus. Who was the debt counsellor?
Hi Maya i have a problem the debt counselor sent me 17w but now they want me to pay outstanding amount for them to tranfare me. Is fare?
Where do you want to transfer to? Another debt counsellor?
Hi Maya, My DC failed to pay my creditors and I accumulating arrears monthly and when I contact them they say my negotiator will call it’s been 7 months now and one of my creditors withdraw from the process stating that the are not receiving payments from DC. What should I do?
Who is the debt counsellor? You can complain to the NCR dccomplaints@ncr.org.za
Ive been suspended by dept council.
Can i apply with another company to assist me further?
Technically you can transfer but if you have not been keeping up payments the creditors are not obliged to continue with the agreement and could demand full payment
Hi Maya, I signed form 16, however, as soon as they sent me form 17.1, I asked for cancellation. They say I must get an attorney to assist with the cancellation, the debt review flag will be dropped if I am not over-indebted. ?
There is a debate about when debt review is triggered, but I suggest you lodge a complaint with the NCR and inform the debt counsellor you will be doing so. The problem is that the NCR seems to take the approach that if you are over-indebted you should go into debt review. I have an issue with this, and how it is all interpreted seems to be unclear. Technically you do have the option not to enter debt review if the magistrate finds you are not over-indebted, but it takes time for the court application to come through. Who is the debt counsellor?
Hi Maya,
My original agreement with my Debt counselor was for a reduced amount over a period of 5 years. The creditors provided counter offers which pushed up the premium. I accepted the counter offers. It was never stated anywhere that the period was going to be extended by a period of 20 months. Are they allowed to make such arrangements on my behalf without communicating the terms with regards to payment period? Apart from an innitial document, no period of payment was ever communicated verbally or in writing. I found paying for a period of 20 months that I still have 5 years left. Also, are they required to record their calls? I was constantly reassured by my profile manager telephonically, that it would be over a fixed period of 5 years.
I would really appreciate your advice.
Lenel
Who was the debt counsellor? You should have seen a final quote. You could still pay off in five years by increasing your agreed repayment each month
Find out if the court order as been issued – you could change it then
Hi Maya, I’ve entered into debt review late March 2023, the first payment should be deducted end of April. immediately after signing the contract I received email from a company that sells funeral covers, saying I’ve opened a funeral cover. I don’t know anything about the funeral cover. They stated that my premium will be added into my monthly installment.
The debt counselor did not explain to me the implications. There’s some sort of misrepresentation. The agent mislead 😕 me.
I want to withdraw from this company before they can start deducting.
I was never given an option to whether I wanna pay creditors directly or I will be paying the debt counselor directly.
Please advise
K8ndly note Form 17.1 and 17.2 has been issued .
Thank you
Sounds like some dodgy practices’ going on. Unfortunately at this stage your only option is to transfer to another debt counsellor
Hi
I signed an application yesterday to go under debt review but I have a feeling the company is not legit can I get out of it
It all depends on how ethical the company is. unfortunately the more dubious ones do rush the process. Inform them ASAP in writing and if they do not stop the process then try complain to the NCR dccomplaints@ncr.org.za
I transferred to a new debt agent towards the middle of July 2022 with a Court order and all fees already paid to the previous firm. The new firm has taken the money I paid to them which was meant to be paid to creditors on my behalf for themselves claiming the following:
• We load the debi-check on our end for the agreed upon monthly instalment.
• The Payment Distribution Agency (PDA) collects and distributes accordingly.
• We are capped at R8000 for renegotiating instalments and interest as you can see above.
• Legal fee of R9801.24 was automatically distributed by the PDA to the attorneys.
I have asked them to explain how they can charge these fees this since on transfer I already had a court order since 2019 numerous times and even provided copies of it to them along with distribution statements etc.
Are they allowed to take the above fees or should they only be charging me the aftercare fee since I have a court order already, in fact I am literally wanting to settle all debt and have the money to this and have explained to the new agents I want to settle all debt and negotiate discounts but they do not listen or care and continue to claim the above fees apply and that they will nor refund it to me.
I feel robbed and taken advantage of, please let me know your thoughts.
This does not sound right – they are charging you as if you are entering debt review for the first time. I have sent to the NCR and asked for their comment
Thank you for your response, I am still struggling to get the debt review agent to refund me the money so that I may pay the creditors myself as i have taken it upon myself to make arrangements with creditors and settle my debts myself as my trust in the debt review agent is now broken.
This is the response from the Regulator:
A consumer can be transferred to another registered debt counsellor at any stage during the debt review process. When a consumer is transferred the following applies:
i. The debt review process does not start afresh. The receiving debt counsellor has to continue with the debt review process where the previous debt counsellor left off. To this end, the transferring debt counsellor must supply all consumer and debt counselling related documents to the receiving debt counsellor upon transfer.
ii. The receiving debt counsellor may not charge a new application fee, administration fee, restructuring fee or legal fee if these fees were already paid by the consumer to the previous(transferring) debt counsellor.
iii. After-care fee by the receiving can only be charged from the date of transfer.
iv. A consumer is required to pay all outstanding debt counselling fees for work actually completed up to date of transfer before the transfer date.
The consumer can be encouraged to lodge a complaint for a detailed investigation.
Thank you again for taking the time and responding, I will lodge a complaint with the NCR, this however will not get me the money back in time to be able to pay it over to my creditors so their actions are really causing me damage, I am going to open charges at the police station since they have helped themselves to money which should have gone to my creditors, i even struggled to get them to explain what the fees are for and at no time did i agree to it as i had a court order, they are not communicating and i have asked them numerous times to pay it back as they are not entitled to it so i can pay it myself to creditors, and i am also looking at small claims court to try have the money returned to me as fast as possible, it is just under R20 000 as one of the creditors was paid, the balance they took for themselves so its money i need back urgently. Your guidance is appreciated.
Who is the debt counsellor?
Blue Star Consultants (Pty) Ltd
I have never signed any form from dept review, but I received message from my bank that my loan has been decreased to zero by MSD dept review I have never signed their forms
that is very strange. I suggest you check your credit record and see if it has you flagged for debt review
Good day
What happens if I’ve been suspended by my debt counselor (because of complaining that they did not explain all the details beforehand and they gave me statements which did not reflect the real amount and I ended up having to pay huge amount of money as arrears to deptors)? Having to pay the deptors myself, not through PDA.
I no longer communicate with my dept counselor as I’ve been suspended and I’m afraid that I might not be assisted when I’ve settled my debt to exit debt review.
Does it mean I owe my debt counselor for the time I haven’t been communicating with them, settling the debt myself?
This is the issue I have with the laws relating to debt counselling. You don’t get a “cooling off” period if you are not happy with their plan. The only option is to transfer to another debt counsellor, although your current one could still deduct fees outstanding. The debt counsellor is the one who can apply for the clearance certificates once your debts are paid. My suggestion is that you lodge a complaint against your current debt counsellor so they cannot demand further fees