Consumers can opt for debt mediation
Johannesburg - Over-indebted consumers with complaints about
their credit providers can seek debt mediation, the National Debt Mediation
Association (NDMA) said on Thursday.
"Consumers are not aware that the NDMA provides free
debt mediation and a complaints handling service," CEO Magauta Mphahlele
said in a statement.
The NDMA is a non-profit organisation which tries to help
consumers to get out of debt through mediation and is allowed to resolve
complaints against credit providers who subscribe to the industry code of
"Complaints can be about the handling of the debt
counselling process by the credit provider as well as how they handle consumers
experiencing payment difficulties," said Mphahlele.
The National Credit Act offers consumers various legal and
voluntary options to resolve debt problems including direct negotiation with
their credit providers or approaching a debt counsellor.
"For those under debt counselling, the majority of
cases (we receive) relate to the process going wrong and as a result credit
providers resorting to legal action to recover what is owed to them," said
Many of these complaints related to the termination of debt
review which was usually followed by legal action to realise the asset.
In the cases in which the NDMA intervened, credit providers
had agreed to reinstate 47% of terminated cases back into debt review, and it
had recovered 54% of vehicles repossessed and 48% of houses due for auction.
Mphahlele said where cases had a negative outcome, it was
usually because the consumer had sought assistance too late, or could not
afford restructured payments, or made sporadic payments, or paid less than what
had been agreed under the debt review process.
In other cases credit providers appeared unwilling to
negotiate with consumers on a case-by-case basis.
"They issued standard responses and were slow to
respond to requests for help," Mphahlele said.
"Many credit providers still operate in silos, with
product, debt review and legal departments all operating separately and little
co-ordination or sharing of information."
Debt counsellors were also to blame in some cases where they
had been slow to implement new or revised debt review proposals, not kept the
consumer up-to-date or failed to provide the required documents to credit