I’ve heard about debt counselling but am not sure what all it entails?
Our government was concerned about the financial future of its population in the uncertain economic times that the world finds itself in and to regulate this, they promulgated the National Credit Act No. 34 of 2005.
The portions relating to over-indebtedness and restructuring of debt came into effect on 1 June 2007.
Debt Counselling makes provision to assist over-indebted consumers by restructuring their debts so that they can afford to meet their monthly living expenses.
Creditors take legal action when a debtor’s accounts are in arrears, which leads to added costs in the form of attorneys fees and collection commission and penalty interest to any arrear amounts. Debt Counsellors can protect the debtor from collection procedures by negotiating with the creditors to reach a mutually satisfactory agreement with regard to the repayment of the debt.
A debt counsellor is a “specialist” who has completed the necessary exams and been enrolled as a debt counsellor on the NCR website.
If the debt counsellor establishes that the consumer is over-indebted, he will proceed with a debt restructuring programme whereby he renegotiates the repayments, interest rates and terms with the credit providers of each and every contract that the client has committed himself to. Once consent is reached, the consumer is presented with one affordable monthly payment which is distributed to the creditors via an authorized Payment Distribution Agency (PDA).
As long as the client maintains his monthly repayment as negotiated, he is protected from all legal action and the normal consequences of non payment. If he finds that the situations have changed again, he will have to ask the debt counsellor to again renegotiate on his behalf – but rather a renegotiation that that the entire debt counselling is set aside. It is imperative that the client maintain contact with the debt counsellor and advise him of all and any changes.
WHAT DID I SIGN FOR AGAIN?
Everyone gets so excited when they go to sign for something big – how many of us actually listen to the person explaining the small print? How many of us say – don’t worry I don’t understand it anyway!
According to the National Credit Act, the person appointed by the financial institution has an obligation to ensure that you understand each and every term and condition in the agreement that you are signing. The agreement must be in a plain and simple language of your choice.
Terms that are used in the contract have to be explained and if the person representing the financial institution is of the opinion, after explaining the agreement to you, that you are still unaware of your rights, they are under an obligation to not allow you to proceed with the contract until such time as they are satisfied that the terms and conditions that are used, are understandable to you.
Contracts for the loan of money to buy houses and cars are especially lengthy documents and still contain some latin words. If the attorney representing the bank is of the opinion that the contents are unclear to you, they are obliged to send the instructions back to the bank and ask for further information. The bank can then arrange for training and courses for the consumer to attend to enable them to gain clarity over the contents of the agreements.
Bottom line – if you are unsure about anything before you sign, please ask and if you are still unsure have them explain again and again until it is clear. Rather take a little longer at the beginning and know what you are signing for than to sign blindly and only realise later how deep you have gotten yourself into trouble.
Fiona Williamson 082 820 6428