LETS GET LEGAL – Legal steps in placing yourself under debt counselling

STOP – take a good long look at your budget – are YOU over indebted?

If you are in a situation where your expenses exceed your income on any given month, and you are battling to meet all your financial commitments, then you are entering a dangerous world.

Before things reach crisis point, it would be in your best interests to consult a debt counsellor. While you are consulting with the debt counsellor, you will be required to sign a form 16 – this is the start of the debt counselling process and this form, together with all the supporting documents such as your credit card statements, mortgage loan account, car payments etc and captured and your creditors are notified by the debt counsellor within 5 days of the fact that you are intending to follow the debt counselling route.
Once this notice has been sent to creditors, there can be no legal action taken by the creditors.
The debt counsellor now has 60 days to look at the application in depth and determine whether the person is actually over indebted.
If it is found that the person is in actual fact over indebted, then the debt counsellor will prepare a debt restructuring proposal which he will send to all the creditors. This will be based on the income of the applicant and restructuring of the debts that will be forming part of the debt counselling application.

This proposal must be sent to the creditors within 25 days of the date of the application – creditors have 10 days to responds to the suggestions contained in the restructuring. If a creditor does not respond, the suggestion is sent to the central PDA (Payment Distribution Agency) and the payments are started and made to creditors.

This is however not the end of the process and the arrangement must be formalised by court and a consent order obtained. Creditors still have the opportunity to oppose the arrangement and file their objections to the application at court.

A magistrate will hear evidence and make a determination based on the facts that are placed before court.

Fiona Williamson 082 820 6428
(fiona@holaw.co.za) •

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