How we can help you
We are pleased to welcome you to Debt Masters. We
have assisted South African consumers in achieving financial
freedom since 2008. Johann Wasserman is our
registered debt counsellor with the National
Credit Regulator (NCR), holding registration number
NCRDC3409.
The
National Credit Act (Act 34 of 2005) (commonly
referred to as the "NCA", as amended by Act 19 of 2014 and Act 7
of 2019 (commonly referred to as the "NCAA",
governs the provision of our services.
When To Consider
When must a consumer consider debt review
The consumer should consult a Debt Counsellor when he or she becomes aware that they are unable to meet their monthly financial obligations, or in situations where the consumer has already defaulted on payment on a particular credit agreement. In accordance with Section 129 of the NCA, the credit provider may have notified them of the default and referred them to a debt counsellor, among others.
The purpose
What is the purpose of the debt review process
Debt Review is a voluntary, consensual process where a registered Debt Counsellor assists an over-indebted consumer or a consumer who is experiencing or is likely to experience difficulty meeting all of their obligations under their credit agreements in a timely manner. The purpose of this program is to assess the consumer's financial position and lifestyle in order to make certain recommendations in order to mitigate indebtedness. Consequently, an order is then made by a tribunal or magistrate court to rearrange the consumer's financial obligations . By doing so, consumers are able to settle their debt over a period of time by paying a single, reduced, and affordable monthly payment. It is essential that the consumer adheres to the repayment plan and refrains from incurring additional debt in order for the process to be successful.
Brief overview
A bird's-eye view of the Debt Review Process
The debt review process begins with the consumer
completing our contact form below , requesting
both a free call-back from our team of specialists, as well as
professional assistance to help with the process.
As a next step, the consumer is required to
complete and submit the required Application Form (Form 16) , the Power of Attorney Form, as well as
provide all the required
supporting documents, such as the consumer’s
identity document, proof your income (recent payslip or bank
statements), proof of residence, marriage certificate (if
married), all correspondence from credit providers including
Section 129 Notices and any details pertaining to previous legal
action. Additionally, similar information regarding the consumer’s
spouse may be requested where applicable.
Our
Debt Counsellor will then assess all documents
submitted
and determine whether the consumer’s monthly expenses and debt
exceed their monthly income. In this case,
a rescue plan will be drafted and implemented .
During the next 60 business day period (3 months), no legal
action may be taken against the consumer who will be fully
protected against repossession of their assets, while the
Debt Counsellor proposes a restructured payment plan to all
creditors
listed by the consumer.
The consumer should be aware
that creditor accounts involving legal action that have already
been initiated prior to the start of the Debt Review Process will
not be considered. It will be the Debt Counsellor's responsibility
to negotiate an acceptable agreement when legal action has already
been initiated.
The process
How the debt review process actually work
The debt review process can be summarised in
6 steps:
STEP 1 - The over-indebted
consumer submits Form 16 and the relevant
information to Debt Masters, where a registered Debt Counsellor
will receive and evaluate the application.
STEP 2 - To inform all creditors that the
consumer has applied for a debt review, Debt Masters will send
Form 17.1 within five business days.
STEP 3 - Upon receiving certificates of balance (COBs) from
various credit providers, the
Debt Counsellor will
verify the information provided by the consumer.
A series of documents will be sent to the consumer during this
process, which must be completed and returned. This is necessary
in order for Debt Masters to proceed with the consumer's debt
review application.
STEP 4 - In order to
determine whether the consumer is indeed
over-indebted, the Debt Counsellor will now
formally assess the consumer's application, which entails an
examination all the consumer's essential monthly expenses and
deducting them from the consumer's monthly income. After deducting
these expenses, the surplus is offered to the consumer's creditors
as a monthly repayment. According to Section 86(7)(a) of the NCA,
the Debt Counsellor must reject the application if the consumer is
not over-indebted.
STEP 5 - The consumer qualifies to be placed under Debt
Review if indeed found to be over-indebted, resulting in the
Debt Counsellor sending Form 17.2 to the consumer's credit
providers and credit bureaus , informing them that a proposed debt restructuring and repayment
plan will be presented to them within 30 business days for their
consideration and approval.
STEP 6 - When a consumer's credit providers have reviewed and
approved the debt restructuring plan, the matter
is referred to a Magistrate Court under Section 86(8) of the NCA
or the National Consumer Tribunal under Section 138 of the NCA, in
order to
obtain an order declaring the consumer to be over-indebted . The attorney handling the matter will contact the consumer.
Typically,
the
debt review process takes 60 business days (3 months)
from the date of application.
Once the court has granted the order, the consumer will be
protected from any legal action taken by their credit providers.
Over the term of the agreement, the consumer will only be required
to make one monthly, affordable payment until the debt is entirely
repaid. In addition to providing regular statements to the
consumer, the Payment Distribution Agency (PDA) facilitates all
payments to creditors on behalf of the consumer's Debt
Counsellor.
A
clearance certificate will be issued to the
consumer once the debt has been fully repaid over the term of the
agreement. Credit bureaus will be notified that the consumer is
now debt-free.
In its most basic form, a
debt review provides a long-term solution to a consumer's
financial difficulties , providing immediate relief while giving them legal protection
against their creditors.
Consequences
Advantages vs Disadvantages of the Debt Review Process
The advantages of debt review are as follows:
1 - In the first 60 business days following the
consumer's application for debt review, the
credit provider may not enforce the credit agreement
against the consumer by taking legal action.
2 - The consumer only has
one fixed monthly, affordable payment .
3 - Under the NCA,
consumers are protected from blacklisting while
they are under debt review.
4 - Under the NCA, the consumer and their
assets are protected from creditors while they
are under debt review. All correspondence with creditors is
handled by the Debt Counsellor.
5 - The debt review process allows the consumer to
take a break from credit.
The
disadvantages of debt review are as follows:
1 - The
consumer may not incur any further debt whilst
under debt review.
2 - The
consumer will be listed as
having applied for debt review on all registered
credit bureaus.
3 - The
consumer is responsible for the fees charged by
the Debt Counsellor, Attorney, and Payment Distribution Agency
(PDA); however, these fees are included in the restructured
payment plan, and are not required to be paid upfront by the
consumer.
4 - To settle all
debts, the
consumer must adhere to any restructured repayment orders
issued by the Magistrate's Court or National Consumer Tribunal. In
this way, the credit score of the consumer will improve after the
debt review process. This is because it will reveal the consumer's
future ability to repay a mortgage or debt.
5 - A
consumer may withdraw his application for debt
review only prior to the Debt Counsellor issuing
a declaration of over-indebtedness (Form 17.2)
or upon receipt of a clearance certificate
confirming that all debt has been repaid.
Responsibilities
You have responsibilities when placed under debt review
1 - The consumer is responsible for
immediately
completing and signing the Debit Order Cancellation Form
(included with Form 16), and returning it to Debt Masters. In the
absence of this action, a double deduction could occur. A consumer
who experiences any problems with their bank in this regard is
advised to close the account and open a savings account with a
different bank. If the consumer does not cancel the debit or stop
order, the bank will continue to debit the consumer's account.
2 - The consumer is responsible for
checking the monthly payment schedule in accordance with the
court order . The purpose of this is to ensure that all creditors have been
paid and to notify Debt Masters of any errors that have occurred.
A monthly statement will be sent to the consumer by the Payment
Distribution Agency (PDA) via SMS or e-mail.
3 - It is the consumer's responsibility to
immediately notify Debt Masters , as well as ALL
creditors, if any of his or her
personal details change during the Debt Review
process.
4 - Consumers are
responsible for
ensuring that debit orders are successfully processed every
month. In this way, the PDA will be able to pay the consumer's
creditors on their behalf. Debt Masters should be informed
immediately if the consumer's debit order is not successful, so
that creditors will not take legal action against you. Unless the
consumer pays regularly as required by the court order, Debt
Masters cannot be held responsible for creditors taking legal
action.
5 - Debt Masters
recommends that consumers
DO NOT SIGN ANYTHING other than the forms
provided by Debt Masters. This is because creditors cannot
repossess the furniture, vehicle, or house of a consumer without a
court order.
6 - Whilst
under debt review the consumer is
not allowed to obtain any further credit .
Fee structure
What fees are payable during the Debt Review Process
1 - As a result of Debt Review, a
consumer will only be required to
pay one agreed fixed monthly instalment until
the debt has been fully repaid.
2 - The
consumer does not have to pay any upfront fees,
as the first monthly payment will cover the costs associated with
the debt review application. As part of these costs, you will be
charged the debt restructuring fee of the Debt Counsellor, the
legal fees of the Attorney representing you in court, as well as
the administrative fees charged by the Payment Distribution Agency
(PDA) to facilitate the monthly payments to the consumer’s
creditors.
3 - The
Debt Counsellor's restructuring fees are
typically included in the first agreed monthly instalment. All
legal fees incurred by the appointed attorney are
usually included in the second, and sometimes the third
instalment, paid by the consumer. The
monthly administration costs of PDAs are spread
over the repayment period. Therefore,
there are no upfront fees to be paid by the consumer . The purpose of these fees is to ensure that the consumer is
legally protected throughout the debt review process. These fees
will be disclosed to all creditors of the consumer and will form
part of the restructuring proposal that will be submitted to the
creditors for their consideration and approval.
4 - There are no hidden costs and the
consumer starts saving from the first month.
5 - Consumers' debt restructuring fees are directly
related to their personal circumstances and the agreed-upon fixed
monthly payment amount.
The NCA limits the restructuring fee to a maximum of R8000
(excluding VAT).
Therefore, if the consumer's monthly instalment is for example
R3000, the restructuring fee is R3000 (exclusive of VAT) and not
R8000 (exclusive of VAT). According to the NCA, if the instalment
is determined to be R10000 per month, the restructuring fee will
be limited to R8000 (excl. VAT).
6 - Debt Counsellors may be able to reduce consumers' monthly
payments, but they are not able to reduce their interest
payments.
Most creditors do, however, lower their interest rates, resulting
in significant savings for consumers. Most consumers are unaware
that they also pay a high premium for debt insurance. Consumers
can also request the Infusion Declaration and Mandate from Debt
Masters to ask their brokers to negotiate a lower insurance
premium per month on behalf of them.
7 - Last but not least, the payment of
the maximum affordable amount (the restructured amount)
will begin immediately
and there will be no payment holiday.
FREQUENTLY ASKED QUESTIONS (FAQ'S)
