A Fin24 user who voluntarily placed herself under debt review and has since settled all her debt, feels she is being held hostage by her car financing institution which refuses to accept a clearance certificate. She writes:
"I voluntarily placed myself under debt review and have settled all unsecured accounts and received paid up letters from the creditors, leaving my vehicle the only account under debt review. However, for the past four months I have been paying my vehicle account directly to the vehicle finance bank and not through the debt review process distributor. My vehicle account is not in arrears and is up to date with its instalments as per original contract.
"My debt review counsellors want to issue a clearance certificate but the vehicle institution refuses to accept the certificate as they have requested the notice of withdrawal and that was sent but now the consultant at the vehicle institution is still refusing to accept the certificate and restructure the contract.
"I have been paying more on my account and they have been accepting my payment but refuse to let me exit debt review because they said the vehicle isn't settled in full, yet another consultant said that they can accept it and restructure the contract as per original contract and there is nothing wrong with my account.
"To top this off, the debt review company debit admin fee monthly off my account and I don't even pay them to distribute my vehicle instalment because I pay the vehicle institution. I have emailed the NCR but nobody responded to me.
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"I cannot see the reason why they won't accept the certificate and restructure my account because I have been paying, even more than I should be paying.
"Please help because I cannot apply for a home loan knowing that one creditor is stopping me from exiting debt review."
Financial Summit Partners advise:
The financial institution with whom you have a vehicle account is applying the Act and NCR's guidelines correctly. Section 71 (Clearance Certificates) of the amended National Credit Act stipulates the following:
‘‘(1) A consumer whose debts have been re-arranged in terms of Part D of this Chapter, may apply to a debt counsellor at any time for a clearance certificate relating to that debt re-arrangement, must be issued with a clearance certificate by a debt counsellor within seven days after the consumer has—
(a) satisfied all the obligations under every credit agreement that was subject to that debt re-arrangement order or agreement, in accordance with that order or agreement; or demonstrated—
(i) financial ability to satisfy the future obligations in terms of the re-arrangement order or agreement under—
(aa) a mortgage agreement which secures a credit agreement for the purchase or improvement of immovable property; or
(bb) any other long term agreement as may be prescribed;
(ii) that there are no arrears on the re-arranged agreements contemplated in subparagraph (i); and
(iii) that all obligations under every credit agreement included in the re-arrangement order or agreement, other than those contemplated in subparagraph (i), have been settled in full.
To be specific, section 71(a)(1)(i)(aa)(bb) only speaks to mortgage accounts and related long-term accounts. Unfortunately, the Regulator does not consider a vehicle account as a long term account and hence the advice from the Credit Provider.
The only other way to exit debt review under the latest NCR guidelines would be for your debt counsellor to not only send a 17. W (notice of withdrawal) to the credit provider in question, but also seek a court order that effectively confirms that your financial situation has improved and that you are no longer over-indebted.
That said, your request to have the debt review flag removed by the credit provider does sound reasonable given all the payments you have made and the fact that the account is not in arrears anymore. I would therefore advise you to ask your debt counsellor rather negotiate with the credit provider's senior management and not the call centre agents - usually sense prevails in such cases!
Hope that helps!
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