How Can I Legally Exit Debt Review In South Africa?
Debt Review is a mechanism created by the National Credit Act 34 of 2005, allowing over-indebted credit consumers to rehabilitate. In 2019 it was reported that of the 25 million credit-active South Africans, 10 million have impaired credit records. This is a colossal figure and is merely an indication of underlying issues regarding the credit industry in South Africa.
Amidst the chief causes of over indebtedness is irresponsible borrowing. One of the effects of debt review is the closure of access to credit. Had this aspect been seen in its pure rehabilitative goal, we would not receive several queries from consumers on how to exit the Debt Review process. This has, in turn, created some unfortunate instances whereby an over-indebted consumer is desperate to leave the debt review to access further credit. Still, where the law does not present a way to do so, unethical “service providers” take money from such consumers promising to assist them in exiting debt review but then hitting a brick wall afterwards. Our ethical call and conduct require us to correctly advise consumers whether or not there are legal options to have them removed from debt review after assessing the circumstances of their case.
As per the immediately above, we will answer questions below from some of our clients and consumers regarding the options available at law for a consumer to be removed from debt review.
- Which legislation governs Debt Review in South Africa?
Debt Review and its processes are regulated by the National Credit Act, 34 of 2005.
- How many legal ways can a consumer exit Debt Review?
There are basically three ways under which a consumer may exit debt review. The available option is hugely dependent on how far the process has gone.
- I applied for debt review few days ago but wish to be removed, is this possible?
Yes. However, if the 17.2 form has been issued, the Debt Counselor has declared the consumer as over-indebted. The consumer may be removed from the debt review process but will attract attendant fees applicable due to the Debt Counsellor. If the consumer withdraws prior, there will be fewer expenses incurred due to their request for the removal of the process.
- Does the position in 3 above change if the Debt Counsellor declared me over-indebted but no Court order has been obtained as yet?
Yes. Where the Debt Counsellor has already declared a consumer to be over-indebted, only the Court has authority to decide otherwise as the consumer would have signed a power of attorney. In this case, the consumer must then provide sufficient evidence in the same application that the Debt Counsellor will bring before the Court to have the debt restructuring made an Order of Court. Before such decision, the Court has the duty to ascertain whether indeed the conclusion of the Debt Counsellor is in order and if the Court, based on the evidence before it, is convinced that the consumer is not over-indebted, will overrule the decision of the Debt Counsellor and remove the consumer from Debt Review. In some cases, and at this stage, consumers tend to not cooperate with the debt counsellor, and after a certain court appearance and no cooperation is obtained, the application is withdrawn as this behaviour may be seen as the consumer’s way of abusing the process to evade their creditors.
- The Court issued an Order for Debt Review. Can I be removed from Debt Review?
Yes, but ONLY upon settling all the obligations under the debt restructuring arrangement held in Van Vuuren v Roets And Others; Nel v Roets And Others (2019) ZAGPPHC 428. In that case, the Court held that it does not have authority to release a consumer until the full obligations under the arrangement certified by a Court Order have been settled. Upon settling all the obligations under the debt restructuring arrangements by the consumer, the Debt Counsellor will issue a Clearance Certificate after which the Credit Bureaus will remove the Debt Review status from the credit profile of the consumer.
- I have paid all my debts and need a Clearance Certificate but, I neither remember nor find my Debt Counsellor; what do I do?
The National Credit Regulator retains a database of all registered and deregistered Debt Counsellors. If a consumer does not remember the Debt Counsellor or their details, they need to contact the NCR on 011 554 2700 / 0860 627 627. The NCR website contains a self-service link to search for Debt Counsellors. Alternatively, the consumer may request a copy of their credit report from any one of the Credit Bureaus, the names and contact details of the Debt Counsellor will be reflected therein if the consumer is under Debt Review.
- My Debt Counsellor is not cooperating and does not want to issue the Clearance Certificate.
Some Debt Counsellors become uncooperative when consumers seek Clearance Certificates, our experience is that the most prevalent reason is that the consumer will still be owing fees of the Debt Counsellor, outstanding paid-up letters from creditors, or refusing to pay the amount requested for the issuing of such Clearance Certificate. If the consumer is of the view that the Debt Counsellor is unreasonably withholding issuing the Clearance Certificate or to do their mandate, the consumer may lodge a complaint on form 29 to the NCR.
The above are the options that consumers have to exit debt review at law. As can be seen, the processes are fraught with legal and technical considerations. We strongly advise consumers to seek our assistance should they decide to embark on the options above. We assist consumers in being removed from Debt Review legally, Debt Review advice and consultations to weigh options, lodging and facilitating complaints with the NCR against uncooperative Debt Counsellors as well as a wide array of other matters.
Kindly contact our expert debt review removal attorneys for comprehensive assistance.
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