05 Feb 2010

Debt Counselling Cases Rise

Debt Counselling 3 Comments

Adv Randolph Samuel @ Lucid Living™

The National Credit Regulator (NCR) announced that it had received an unprecedented number of debt counselling applications in the first two days of February 2010.

According to official figures released by the NCR, 1,429 individuals had entered debt counselling for assistance, to relieve their debt burden. This takes the total number of applicants, in debt counsellingto 145,027.

The steep increase can be attributed to a few factors –

  • In 2009 the economy shed close to 1 million jobs. The full impact of this, is now working its way through the financial system. The retrenchment payouts and savings are drying up and people are finding themselves in financial dire straits;
  • Through 2009 creditors were encouraging their clients to engage with them to arrange reduced monthly instalments. However, with the job market stagnant and the economic recovery slow, the reprieve did not last long. Consumers are finding it increasingly difficult to service their debt, even where voluntary arrangements have resulted in the monthly instalment being reduced;
  • In response to failed strategies to stem the rising bad debt tide, creditors are resorting to firmer, traditional collections methods. According to the NCR during the third quarter of 2009, 24.70 million enquiries were made (to credit bureaux) for debt collection purposes (this is a 110.6% year-on-year increase). With credit providers taking a more aggressive stance, consumers are quickly realizing that options are limited and debt counselling is an effective remedy;
  • Debt counseling has received significant attention from the NCR and various industry stakeholders in recent months, with a view to improving efficiencies and standards. This exposure has greatly improved the industry’s service levels and increased the public awareness of the process. People are less skeptical of debt counselling- the rise in debt counselling cases is a testament to this; and
  • The consumer’s attitudes and perceptions of debt counselling is transforming. Consumers recognize that they are not alone – there are millions of people in a similar financial quagmire. The negative stigma associated with financial distress is less burdensome and shameful. People recognize that they have to be proactive and take action to salvage their situation – the problem cannot be ignored.

Thousands of consumers in financial distress come to realize each day, that debt counselling is one of the few viable alternatives available to them. It is an extremely powerful legal right and if harnessed correctly, could mean the difference between financial disaster and financial salvation. Debt counselling allows you to maintain an acceptable standard of living, keep your home, car and other hard earned possessions, while being accountable for servicing your debt in a responsible manner. There should be no embarrassment or shame on your part, millions of consumers world-wide find them selves in a similar situation – in most instances, not of their own doing, but because of irresponsible and reckless corporations.

Be responsible and take ownership of your financial problems. You alone control your financial destiny. The situation you find yourself in today will change – whether it’s for the better or worst, depends on what you do today.

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3 Responses to “Debt Counselling Cases Rise”

  1. FED UP says:

    i have been under debt review for almost two years – paid every month – nedbank have terminated the review and are taking legal action against me – i will probably loose my house, debt review will never work because the some credit providers are not interested in making it work – i even have my house on the market to sell – this holds no sway. i owe all of them only nedbank has done this – so they will take my house, leave it empty, it will go to reck and ruin they will put it on auction and get less than half that it is worth – instead of making an arrangement with me for debt review adjustment – to stay and take care of their investment – how does this make financial sense -on top of this they will now longer be getting the insurance amount and the life insurance policy i have to cover in case i die will be cancelled 3 x less money for nedbank really good financial planning there chaps – makes you wonder if i should really feel so bad about the way i have messed things up – but on the whole after two years i would say debt review is a waste of time and cause needless stress and is a waste of money – i have paid over r200 000 since the start and i am more in debt than when i started it is a waste of time you are better off contacting the credit providers directly at least then you will know what is happening with your finances instead of relying on a third party and not getting the correct information.

  2. RandolphLucid says:


    First and foremost thank you for sharing your personal experience with us.
    I know that this is a stressful and even traumatic experience, more so when things go wrong in the process.
    Your experience will be valuable to all our readers, since it highlights several truths and problems with the current debt review system.

    However, for the benefit of all readers it is necessary to clarify certain facts about debt review.
    1. If you enter debt review and your re-structure proposal is made an order of court, no creditor can terminate the debt review process – PROVIDED you meet your monthly repayment instalment.
    2. Debt review is the most cost effective legal option, when compared to administration and sequestration – PROVIDED you engage an ethical and professional debt counsellor.
    3. Debt review is the only legal option whereby you retain ownership and possession of your assets – NO REPOSSESSION.
    4. Your monthly instalments are paid to a NCR approved Payment Distribution Agent, who then pays the monies over to your creditors – no money is paid into the debt counsellor’s bank account. This ensures that there is NO FRAUD committed by the debt counsellor. You receive a monthly statement from the Payment Agent and you know exactly where your money is going. Confirm that your prospective debt counsellor is registered with a NCR APPROVED Payment Agent.
    5. Credit providers can be challenging to deal with at the best of times, so it is no surprise that they are even more intolerable when you have fallen behind on your payments and they desperately want their money. This is why your efforts are best served by using a third party (i.e. a debt counsellor or attorney) to represent you. They know the law, are objective and unemotional and have a vested interest in getting your matter settled as quickly and effectively as possible. BUT, they have to be committed to helping you and good at what they do.

  3. Sonja says:

    I have been under debt review since 2009. Since January 2010 i noticed that the accounts according to the proposal that should be closed is not closed and is still receiving money. I brought the before mentioned problem under my DC’s attention but still haven’t received an answer to why this accounts are not closed. In October 2010 i received numerous phone calls and letters from my creditors. After bringing this to my DC attention, i was informed that the NPDA has distributed the money incorrectly and not according to the proposal, i didn’t receive monthly statements from my DC and therefor couldn’t see that the money was distributed incorrectly. Six of my accounts should be closed by now according to the proposal and only 1 since 2009 is closed and paid in full. After numerous e-mails and telephone calls, meetings between my DC’s attorney and the NPDA to date i have no resolution to my problem. I have decided to not use the NPDA any longer and rather start distributing the money myself from Feb 2011 to make sure that the payments are made correctly. I started phoning my creditors to find out what is still outstanding to may suprise ABSA informed me that they have terminated the debt review without me knowing about it. I have lodged a complaint with the NCR in November 2010 with regards to the NPDA not distributing the money correctly but still no answer. Is there any way i can see an attorney to handle this matter on my behalf or do i have to go through the NCR? My nerves are shot and i don’t feel that anybody i’m dealing with is taking this matter seriously. This could have real implication on my credit record.

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