Eva Smith (Attorney) @ Lucid Living
Mpho Msani* had been to a debt counsellor (DC) to assist her with her overwhelming debt. She received a restructure proposal shortly thereafter and arranged for monthly payments to be made to the DC in terms of the proposal.
Four months later she received a letter from her Bank advising that the debt counselling process had been terminated. She immediately contacted her DC who advised her to ignore the letter as she was under debt counselling and the creditors could not proceed with legal action.
Two months thereafter she received statements from her Creditors which reflected that no monthly payments had in fact been received from the DC.
In April this year Mpho received a Garnishee Order from her Bank and contacted Lucid for assistance.
Mpho advised Lucid that she paid her DC R1500-00 when she signed the application forms. When we asked if the restructure proposal was made an order of court, Mpho was confused and advised that she is unaware of an order ofcourt.
Upon reviewing Mpho’s documents, Lucid discovered that Mpho’s creditors never voluntarily approved the restructure proposal; the restructure proposal was not made an order of court; the DC received monies from Mpho, but never paid this over to the creditors; and judgment was taken against Mpho.
All this could have been avoided had Mpho been represented by a competent and professional DC.
The National Credit Regulator (NCR) is taking a tough stance on errant DCs. In April this year the registration of two non-compliant DCs had been cancelled by the National Consumer Tribunal.
A common problem is that many DCs fail to submit proposals to the creditors within the 30 day period or fail to submit restructure proposals to the Magistrate Court to be made an order of court.
This has serious implications to the consumer, as creditors can terminate the debt review process and institute legal action. This results in judgments against you (that destroy your credit worthiness) and repossession of your assets.
It is important that you choose your DC wisely. We have developed some key questions for you to pose to a potential DC, to ensure you get one that is up to scratch.
Are you registered with the NCR?
Ensure that your potential DC is registered with the NCR. If they are registered they will have a NCRDC number and a Registration Certificate. Visit http://www.ncr.org.za/ to check if your potential DC is registered, alternatively contact the National Credit Regulator 011 554 2600.
What are your qualification?
Find out whether your DC is qualified to give you advice. A DC must have legal and financial expertise. Knowledge and experience in this area is crucial for a successful debt review outcome.
Do you have a legal department?
Find out whether the DC has a legal department. An in-house legal department will result in better management of your matter and lower costs for your court applications.
What are your fees?
Find out what the debt counselling and legal fees are before you appoint the DC. DC fees are regulated by law and a DC should not be charging you more than the regulated tariff
Do you use the services of a Payment Distribution Agency (PDA)?
Once a restructure proposal is made an order of court, you will be required to make monthly payments, in terms of the restructure proposal, to an approved PDA. Find out from the DC who their PDA is and confirm that it is an approved PDA with the National Credit Regulator.