Under debt review, yet sinking ever deeper | Fin24

Under debt review, yet sinking ever deeper

Mar 17 2014 10:23
After paying off her debt under debt review for a number of years, a Fin24 user was shocked to discover that she is now actually much more in debt. She writes:

I am currently under debt review with attorneys.

My first debt counsellor charged me for work which was never done. He now works at a bank and of course got away with what he did to all his clients.

During February 2010 I was diagnosed with breast cancer and, well, my life fell apart. Up to this point of my life I had never had a bad debt. My credit report can prove that.

However, I found myself under debt review. What I had to go through no person should ever have to face.

The bank almost took my house and I payment distribution agent (PDA) every month.

I am now in a position to pay off a little extra on my debt, but am aware that I may only do this via my debt counsellor.

Of course this is work for him, so he told me to phone my creditors and get my own balances, which I have done.


I was horrified to find out that my home loan, which was R480 291 on the date granted (March 2 2010) by the court, is now on R595 108.

How am I ever going to get out of this situation? On contacting the bank I was told that they cannot tell me what my new instalment will be.

Should I cancel the debt review? This can only be done once the court order has been rescinded by the courts. This does not make sense.

If I cancel I might not be able to pay the new amount. If I don't I am going to lose everything.

I calculated that my payments to my PDA over the last three years were in vain as this money has now been added in interest to the bond.

If there is anyone who can help I would appreciate it. I am sure there are many others like me who do not know where to turn.

And my debt counsellor obviously wants nothing to do with it.

Renée Marais (NCRDC1780), an independent debt counsellor, responds:

All the proofs of payment made to the PDA must be investigated and a full audit done on the amounts distributed to your creditors according to the court order granted.

The funds distributed to the creditors must be 100% in accordance with the order granted by the court.
The payments made by the PDA - the actual bank payments, not the usual word file sent to consumers as proof of payment - must then be tallied with the payments received by the creditors.

The interest and deductable fees allowed by the court order must also be taken into account.

When a consumer is under debt review a debt counsellor must, at the time of the debt review, negotiate with the creditors to reduce the monthly payments.


In many of the cases they must renegotiate the interest rate and the monthly repayment term.

If this is not done, the section in the act that refers to the amount payable that must be taken into consideration is section 103(5).

This is a variation on the in duplum rule. It means the amount that is in arrears under a credit agreement at the time of debt review may not increase to double the amount (including all interest and costs) until the amount owed is doubled.

Thereafter no fees or interest may be added and the double amount is the amount that should be paid off.

For example, if you borrowed R2 000 from the creditor and you owed R500 at the time of the debt review, the court order is granted on the R500 owed by the consumer.

The cost and interest added may not exceed R1 000 and the consumer will then in effect pay off R1 000.

Held responsible
The first debt counsellor must be held responsible for non-performance and a complaint must be lodged with the National Credit Regulator (NCR) on Form 29.

You can find this on the NCR website.  www.ncr.org.za/forms.

He has to at least refund you 75% of the debt restructuring fees you paid.

The NCR can and must assist you with this, even if he is no longer active as a debt counsellor.

The second debt counsellor must assist you in the debt review process. It is his duty to do a re-evaluation of his consumer's debt review on a yearly basis and assist you in the best way forward.

It is true that the order by the debt review court must first be rescinded in order for you to resume normal credit repayment in terms of the original credit agreements.


Before you take that step, however, it is important firstly to know if you are able to afford the original repayments.

If not, the debt counsellor should be able to adjust your monthly distributions to pay more to your creditors.

The court order granted is for the minimum amounts available for distribution to creditors at the time of the application.

When a consumer is in a position to pay more, usually what needs to be done is to start paying off the smaller creditor first.

Once that is done, add that instalment to the next smallest creditor until that one is paid in full and so forth.

This has been proven over and over as the best way for a consumer to pay off debt in the most efficient way.

The only other way to get out of debt review is to pay off all your debt. The debt counsellor then provides you with a Form 19 clearance certificate.

There are currently amendments awaiting President Jacob Zuma’s signature to turn them into law.

These will make provision for consumers, who have paid off all their credit except for a bond, to receive a clearance certificate, again become credit worthy and resume their lives.

If it is found that the PDA did not distribute the funds correctly according to the court order, you may have a civil claim for negligence against the PDA.

I have successfully assisted numerous consumers in similar situations. It can be done.

- Fin24

Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.

- Fin24


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Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

money  |  money clinic  |  debt  |  debt review


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