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"Debt review" means an application
by a natural person ("consumer") to a debt counsellor
to investigate the financial position of the consumer. If
it is determined that the consumer is unable to, or may experience
difficulty in, meeting all his financial obligations the debt
counsellor may propose a debt re-arrangement plan to all credit
providers, or make a proposal to the Magistrate's Court to
re-arrange the consumer's obligations and/or declare one or
more of the consumer's credit agreements reckless.
Debt counselling is expected to offer people who are over-indebted
a way to negotiate a more affordable repayment plan with their
creditors. The process is provided for in the National
Credit Act (NCA), which became fully effective on June
1 2007, and applies to credit agreements entered into before
and after that date.
Debt Counselling is a Government regulated service and is
the solution for over-indebted consumers. Should you be unable
to meet your monthly financial commitments under credit agreements
on a monthly basis, you may formally apply to
CLEARDEBT for debt review. This process is fully backed
by the National Credit Regulator and is in line with the National
Credit Act. The debt review process is binding
on your creditors and they cannot institute legal action against
you during this period.
The government legislated the National Credit Act on the 1st of June 2007 to promote a regulated, fair and transparent credit market. The Act protects consumers from reckless lending and provides over-indebted consumers with a means to pay off their debts in a responsible and affordable manner. At Clear Debt we have been trained by the National Credit Regulator (NCR) to act as a mediator between the consumer and the credit providers, arranging debt repayment plans.
Debt Counseling is NOT Administration, Sequestration or Debt Consolidation. With Administration and Debt Consolidation, you hand control of your finances over to a third party and end up paying off your debt over a very long time. You will also pay back much more than your original debt. With Sequestration, your assets are sold off to cover your debts, leaving you without any assets and an inability to obtain credit.
Debt Counseling allows you to keep all your assets and pay back all your debts in as short a time as possible. Once you have applied, none of your creditors may take legal action (repossessions, garnishee orders etc.) against you. If you are over-indebted, there really is only one viable option.
There are no restrictions on who can use debt counselling - anyone from any income group and who owes any amount of debt can apply for debt counselling.
All Credit agreements must be included in the debt re-arrangement plan. If you are married in community of property both spouses will have to apply.
INFORMATION AND DOCUMENTATION REQUIRED
- Proof of income (pay slip)
- If working overtime or for commission, include at least 6 months of salary slips
- Copy Of ID
- List ALL creditors and include ONE recent statement for every creditor
- When handed over to an attorney, list attorney, together with creditor
- Credit Bureau report (debt counselor may draw this at R25 each)
- When married in Community of property, the spouse ‘s details MUST be included
- List of Essential Monthly Living Expenses
On receipt of this application the CLEARDEBT will advise all
credit providers, and all registered credit bureaus that you
have applied for debt review.
CLEARDEBT will notify all your creditors’ Debt Review
Departments of your application for debt review
in the correct manner, way and time as prescribed in the Act.
Your creditors may then not exercise or enforce by litigation
or any other judicial process any right or security under
that agreement until the Magistrate’s Court hearing the matter
makes a decision which it considers to be just in the circumstances.
Should all requested documents not be submitted to CLEARDEBT within 10 days from application, your application will not be accepted.
If married in community of property, both parties must apply for debt review on one application.
Once we enter into negotiations on your behalf all credit
and store cards will have to be destroyed. Consumer may not
enter into any credit agreements; consumer may not use any
credit facilities while under debt review
this shows a further commitment to us that you are serious
about terminating your debt and freeing yourself of this ever
increasing social burden.
It is important to note that once the consumer enters into
the debt review program direct payment towards
the creditors will stop, and a reduced monthly payment will
be made towards the National Payment Distribution Agency (NPDA)
appointed by the National Credit Regulator. The NPDA will
distribute payments amongst the creditors in accordance with
Clear Debt’s proposal.
CLEARDEBT is responsible for the aftercare service in respect of the consumer as well as the creditors.
When the consumer’s financial position betters, which it will if he upholds his restructured repayment agreement, and gives his full co-operation to ClearDebt, a clearance certificate will be issued and his status removed from the credit bureaus database.
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