The National Credit Act 34 of 2005 gave rise to the establishment of the Debt Counselling profession in South Africa. In terms of Section 86 of the Act, an over-indebted individual may apply to be placed under Debt Review with Debt Review offering the following remedies:
Considering the current economic situation, Debt Review appears a marvellous idea, and in theory, one can obtain leeway in dealing with an intimidating amount of debt. However, it can also be an unopened parachute if one fails to pay attention to the detail and take the correct steps, leaving you dangling upside down in a thorn tree.
Many consumers fail to recognize that Debt Counselling is not a charitable service. There are specific fees which are applicable, and though they may seem insignificant, they can all add up. Failure to actively participate in one’s rehabilitation, research the options or consequences of certain decisions, make responsible changes to one’s lifestyle, or abide by the restructured agreement, can result in a substantial increase in your debt obligations. Accordingly, it is crucial that before starting a Debt Review process, you as consumer do the following:
In addition to the abovementioned, it is imperative that one knows and understands the effect of the fees that you will have to pay in terms of the Debt Review process. The fees are fixed in terms of the law, and if your Debt Counsellor is charging in excess of the set fees, one can report them to the National Credit Regulator or Credit Ombud, whose contact details are easily available online. The standard fees as of 2011, until such date as they are altered are the following:
It is important to understand that applying for Debt Review is not in itself a total solution for your debt problems. It also asks of you to take responsibility in rehabilitating yourself, understanding the process and participating therein. A casual and irresponsible attitude may result in your debt increasing rather than decreasing and as reduced payments means the payment of debt over a longer period, a committed attitude for the long haul is essential to making the process work.
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