New deal to help indebted consumers

2010-11-11 17:58

Johannesburg - With credit-related court backlogs still sky high and 47% of credit active consumers in arrears, industry players on Thursday unveiled a comprehensive set of voluntary measures to streamline the debt review process.

The task team was set up by the National Credit Regulator a year ago after the National Credit Act and its debt counselling programme came into effect three years ago.

Proposed measures include greater transparency between credit providers and debt counsellors, as well as revised repayment terms for overindebted consumers.

These terms have been agreed at industry-wide level - a serious compromise by the banks which have until now opposed every case.

According to Paul Slot, spokesperson for debt counsellors, such a quick turnaround to a uniform industry-wide system is an "SA success story", as some other countries have taken 10 years to get the system implemented.

The challenge now is to get more debt-stressed consumers to enter into the process to alleviate their plight. There have been 220 000 applications for debt counselling by consumers, yet 9 million are in arrears.

"This solution is a fantastic opportunity to get out of trouble a lot quicker, but it will need a mindset change," said Slot.

It is believed the expansion of the voluntary (industry-funded) debt counselling dispute mediation capacity of the National Debt Mediation Association for disputes between consumers and credit providers will also go a long way towards improved cooperation by credit providers. It will also help ensure that disputes are dealt with.

While 20 000 cases have been resolved through the court system, a further 24 000 are currently on the court roll.

It is now hoped more cases will be resolved on a consensual basis once the task team's proposals have been implemented. Some revised measures are currently being implemented, while others are due for implementation during 2011.

  • Abdou - 2010-11-11 19:04

    The problem is the high interest rates of 30% plus. Banks needs to review this or government via legislation. Otherwise people will never get out of the debt trap

  • Carl - 2010-11-11 20:51

    The banks and debt collectors do everyrhing in their power to keep debtors in arrears. 10% collection charges, sundry fees, 27% interst on arrears mean that you have little opportunity to remedy the situation. Banks should charge a reasonable interest rate and offer repayment terms so that the defaulters can rectify the situation. Why would you want to repay the debt when every payment subject to a 10% fee! Rediculous!

  • Mike - 2010-11-11 21:39

    We will never get out of situations like this when banks allow so called debt collectors to buy the debt portfolio from them.A case in point is MBD who work on a system of secerecy and dare I say fraudulent practices.They do not offer any feedback on balances and if you are paid up they refuse to give you a document stating closure.Then a year or so later you are slapped with more debt ,lawyers letters and such.Then the process starts all over again and they milk you for a few thousand Rand more.

  • Frank - 2010-11-11 22:24 need to find another Debt Counsellor. You're being ripped off. Report the Debt Counsellor to the National Credit Regulator if you fell you being taken for a ride. Abdou if you accepted 30% interest from your bank you only have yourself to blame...sorry. We all must accept responsibility for the Debt we've accrued. I've been under Debt Review for over 2 years. It's not easy but it's worth. The Banks are scum make no mistake

  • Laila - 2010-11-11 22:33

    I am currently on Debt review with a Debt councillor in Cape Town,debit order goes off every month on Bank Statement,but Creditors are not paid as per the signed agreement,Creditors send SMS to me all the time and Debt Councillor does not resolve my problem, but collects their fees each month.I have to phone Creditors back on my expense(extra)regarding their enquiries.You are willing to make payments,but Debt Councillor not providing a good service.NCR was also advised about my problem with this said Debt Councillor,but nothing was followed up by them.What steps can I take? I am so stressed about keeping my job as well as sorting out my Creditors.please help me in this regard.

  • Alta - 2010-11-12 06:49

    If you are under debt review is not as bad as it seems. Agreed the fees are high and that needs to addressed, I had the opurtunity to do debt review iwth a financial institution, and your debt counsellor is collecting big time, so if you can reather go and see your creditors and come to some arrangement with them, before going under debt review. If all charges are added, you will be amazed of how much you can actually save for yourelf instead of enriching the councellors as there are some of them who are a rip offs.

  • Paul - 2010-11-12 07:12

    If 9 million consumers are in arears, but the country only has 5 milion tax payers, then they have been giving thear money to unemployd people. Go tell someone else about the problem you created for yourself.

  • paul - 2010-11-12 07:48

    Laila. 1. Ask your Debt Counsellor or PDA for a copy of the PDA statment which will indicate if payments are made and show this to your credit providers 2. make sure payments made are reflected on your statements. Ask your credit provider for statements 3. Has your case been refered to Court? Check this. 4. The problem is that at present even if repayment plan is accepted the Credit Provider does not ammend their system accordingly and this is why they keep on phoning you. At present they will only do so when Court Order is in place. Also make sure your proposed repayments are reasonable

  • Howard - 2010-11-12 08:18

    The Act is very specific JC, the onus will be more and more on us, at the time of lending, to ensure that we cannot be accused of reckless lending.

  • Tammy - 2010-11-12 08:59

    I have an employee who owes Afican Bank +/-R22,000. Is it better for her to go under debt review or should she go directly to the Creditor - African Bank to arrange a payment plan? What are my options for this poor woman? I have another employee who has been paying back R990.00 each month for the last 6 or 7 years. This is a total of +/-R55,000.00 when the original debt was +/R26,000.00! She is under administration and every 3 months the attorney is meant to distribute the funds. However the funds arent equally distributed, when they are distributed, and random interest fees/ charges are added on. I have managed to reduce what she owes to +/-R5000 (after many letters to the Cape Law Society and her creditors demanding an investigation) but there just seems to be no end. Can I ask her to approach a debt counsellor or should she go to court, or should she just continue paying the R990.00 each month until it is paid up?

  • Margaret @ Paul - 2010-11-12 08:59

    Your logic re taxpayers and the unemployed is faulty. There are many people working who fall below the tax threshhold of R57,000.00pa (or R88,528.00pa if 65plus).

  • SS - 2010-11-12 12:28

    @ Tammy, suggest you consult with a good insolvency attorney. To my knowledge the interest and collection fees on a debt may not exceed the value of the debt claimed. I am not an attorney but get this checked out.

  • Dr Zeek - 2010-11-12 15:21

    @ TAMMY: NCA and the Nedbank judgment are very clear on charges, interest etc. Please refer both matters to the National Credit Regulator complaints dept @ and they will take the matter up on your employees' behalf.

  • Anon - 2010-11-15 16:32

    One thing of note also is that Debt Counselors themselves should not collect or receive monies directly. The money that goes off by debit order every month is handled by a PDA ( Payment Distribution Agency) Your debt counselor is also paid by the PDA. Another Point to note is that if someone is already under administration, you cannot place that debt under review as legal action has already been placed. This debt is seen as a statutory deduction before your debt is serviced.

  • Steve - 2010-12-01 15:24

    Go investigate the 'in du plum' rule .. amazing when people actually know what their rights are and see how people who are trying to helpo us are actually ripping us off - don't ever pay more then 100% interest of the original debt

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