We are considering making use of debt review. We however have the following concerns as we have read up about the process. Please could you clarify the following for us :).
- How do we withdraw from the process let say in a year if our income/cash flow becomes better and what are the penalties/costs to do so?
- I have read that some creditors get less that the agreement is and then the person under review has to catch up all the arrear payments when it comes to light. Also that the banks sometimes do not agree to the decreased amount and that it comes to light sometimes only after three months and that they want to then repossess as the liability too pay those arrears is then with the person and debt review?
- Do you assist in covering the medical bills as well as that is one of our major creditors along with overdraft fees?
- What is the turnaround time after we submit the application form to when we are covered? How long does the court application take as someone told me they waited three years for it to be done via another agency?
I apologise for all the questions but it is a big decision and would really appreciate your assistance.
I spoke to someone on Thursday but they have not yet contacted me back. They did however say Monday so I will wait.
Thank you for your question. It is great to see that you are doing research and asking the right questions before making your financial decision.
1. Withdrawing from debt review:
Cancelling your debt review is possible. A signed letter with an instruction for us to cancel is all it takes. A cancellation fee of 75% of the debt counsellor fee is payable if you have not yet paid your first instalment and we have calculated your payment plan.
If there is a change in your financial situation and you are able to settle all your arrears and carry on with the original contractual terms we will issue a clearance certificate. The clearance certificate is sent to all creditors and credit bureaus, which is then required by law to remove all information related to you previous debt, giving you a clear credit score.
But, if you exit the debt review before receiving your clearance certificate you need to consider the following:
When a debt review is cancelled, the original credit agreement is revived and the creditors are free to proceed to enforce their rights in terms thereof. That is why we urge consumers not to cancel without making prior arrangements with creditors. We often assist them to do so. First reach a written agreement with the creditor about the capitalisation of all payments in arrears and the resumption of the original instalments prior to cancelling your review and losing your protection. What you must also keep in mind is that your debt review will be listed on your credit profile until a Form 19 is issued. This can only happen when your original instalments according to original contractual terms can be maintained or if your debt is settled.
Also keep in mind that if you exit the debt review prematurely, the flag on the credit bureaus cannot be removed. It can only be removed when;
(a) you have brought arrears up to date and are able to pay original instalments, or
(b) if your debt has been settled.
This has been implemented because there were consumers who misused the process to avoid paying their debts, and who then jumped from one debt counsellor to another.
2. Creditor agreements, instalments and court order:
When you have applied for debt review your debt counsellor will negotiate a repayment plan with your creditors. Once negotiation is done it is turned into a court order. This means your repayment plan (instalments and interest) is agreed upon by your creditors, regulated by the National Credit Act and authorised through a court order. With your court order you are then legally protected against creditors – given you stick to your repayments each month.
Your case will be referred to a court within 30 days after applying. This only means that your case will be on the court rolls, but might only be heard in a few months, depending on how busy the schedule of the particular court is. As long as there is a court case number, which we get within 60 days, the credit providers cannot terminate your debt review.
3. Medical bills:
Yes, medical bills are included in your debt review repayment plan as well as your overdraft.
4. Debt review turnaround time for cover and protection:
One of debt review’s benefits is the immediate financial relief it brings. You can expect to be protected and setup with your new repayment plan by the time of your next pay cheque.
Hope this information helps.
If you have any further questions you are welcome to send us a mail at [email protected] and we will gladly assist.
Have a great day.