Many South African consumers find themselves in sticky situations where they aren’t able to meet their monthly financial obligations.
After being hounded by banks, clothing stores or furniture shops, the consumer’s detail’s end up being handed over to a debt collector.
South Africans struggling to pay off their debts are nervous and uncertain about how to go about resolving their issues.
In 2007, the National Credit Act introduced a process known as debt review or debt counselling.
Many consumers who find themselves struggling to survive, are desperate to get the debt collectors off their back and seek the assistance of a debt counsellor. They approach a debt review company, thinking all of their financial issues will be resolved.
One of the advantages of debt review is that it offers consumers protection against their creditors while they under debt counselling; however, it must be remembered that they run the risk of being rejected by the counsellor when applying to be placed under review.
The problem is, that all too often, this is not the case. Debt counsellors may not make a correct determination or might not fully advise the consumer of the debt review procedure.
This may cause the consumer to default on one of the payments or the repayment proposal may be rejected by one of the creditors after the credit bureaus have been notified and the has been consumer listed.
The implication is that the consumer is listed as being under debt review with all of his/her creditors when only one creditor is receiving payment of the lump sum.
Even though the consumer is protected against that creditor, the others may still be able to take legal action.
Normally, once the consumer has paid all of its debts to the creditors in terms of the repayment proposal, the debt counsellor should issue a clearance certificate and remove your listing with the credit bureaus.
In some instances, the process becomes complex due to an oversight or mistake that may have occurred in the application phase.
We shall deal with the remedy to this complexity in the next part.
For further information, you are welcome to contact our offices on info@tuckers.co.za or 011 897 1900.
Article contributed by Stacey Bonser Of Tuckers Inc.
