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Recently there have been some common misconceptions regarding the debt review process. Due to a few bad apples in the industry, this being Debt Counsellors who are simply looking to swindle the consumer, the process itself has attracted an unwanted stigma.

Besides the unethical behaviour of certain Debt Counsellors, consumers have generated some preconceived notions about the process itself which are not necessarily true.

Some common misconceptions or misunderstandings about Debt Review are:

  • Debt Counsellors collect your money and do not pay it over to creditors
  • Debt Review will affect you when making future job applications or when you are trying to enter into a lease agreement
  • The consumer must appear in Court when applying for Debt Review
  • Debt Review takes a long time to complete
  • Debt Counselling only applies to those who are severely indebted
  • You must pay upfront fees over to the Debt Counsellor
  • Debt Review is a type of blacklisting against your name
  • Debt Review does not work

 

Here is our response to these common misconceptions:

 

  1. Debt Counsellors collect your money and do not pay it over to creditors

This might have been the unfortunate case for a small number of consumers who unfortunately engaged with an unethical “Debt Counsellor”. However, in terms of our conditions of registration with the National Credit Regulator, a Debt Counsellor may not possess or have access to a client’s funds.  A Debt Counsellor is obliged to make use of an NCR registered Payment Distribution Agent, who manages the consumers payments and distributes it amongst their creditors in terms of the agreement with the creditors.

We use the services of Hyphen PDA who is a registered Payment Distribution Agent. Hyphen collects the monthly instalments from our clients and makes the relevant distributions to our client’s creditors.  Our clients receive an SMS once the debit order is deducted from their account, and another SMS once the funds have been distributed amongst the creditors.  Our clients have access to a portal where they may view their Debt Review progress and receive a monthly statement.

This process assures our clients that their monthly payments are safe and distributed accordingly.

 

  1. Debt Review will affect you when making future job applications or when you are trying to enter into a lease agreement

Some consumers do claim to have been rejected for job applications due to their Debt Review status.  This is usually true when applying for work of a financial nature where one might have access to company funds and the company might view the consumers financial position as somewhat of a risk to their business.

Companies as part of their procurement policy will often check your credit record and should there be any reason for concern for example you may have a default listing, you will not be accepted in any case.

In short, your Debt Review status should not have any effect on your employment applications as this may be considered discriminatory on part of the employer.

In regard to entering into a lease agreement, should you be declined due to your Debt Review status, you can request from your Debt Counsellor a letter confirming the monthly provision amount for rent in your budget on condition that the monthly rent is not more than what was provided for in your budget.

 

  1. The consumer must appear in Court when applying for Debt Review

All Court applications are dealt with by the attorney appointed by your Debt Counsellor. It is only in very special circumstances where the consumer will be required to be in attendance on the date of the hearing such as when a Magistrate might request for the consumer to be present at Court or in certain jurisdictions for example the Pietermaritzburg Magistrates Court where the consumer is required to be present, but these are only exceptions to the rule.

Debt Counsellors are not present during the hearings either and are also only called to Court in special circumstances.

 

  1. Debt Review takes a long time to complete

Debt Review takes as long as you want it to take, and it simply depends on the consumers affordability.

We offer flexible repayment plans to all our clients whereby they choose whether the debt is settled over 12, 24, 36, 48, 60, or 72 months.

When you sign up with us your Debt Review repayment term is also flexible as we conduct an annual review on all our clients’ financial position.  If an improvement is noted, you will be advised to increase your instalment to exit the process sooner.

 

  1. Debt Counselling only applies to those who are severely indebted

There is no mandated value in terms of the debt you must have in order to apply for Debt Review.

The Debt Review process exists to assist all over-indebted consumers irrespective of how big or small their debt is.

 

  1. You must pay upfront fees over to the Debt Counsellor

All fees charged by Debt Counsellors are regulated by the National Credit Regulator and the Debt Counsellor ought not to charge any upfront fees.

All of the fees applicable to your application for Debt Review is incorporated into your debt instalment which is paid to the Payment Distribution Agent (PDA).

 

  1. Debt Review is a type of blacklisting against your name

At the inception of your Debt Review application the Debt Counsellor registers you on the National Credit Regulator’s Debt help system which in turn informs all credit bureaus that you have applied for Debt Review and therefore this will be noted on your credit profile.

This is to merely avoid clients who are under Debt Review from applying for more credit.

Once you have settled all the debt, or exit the debt review process, you will obtain a clearance certificate and this adverse listing will be removed from your credit profile.  You can thereafter   reapply for credit.

 

  1. Debt Review does not work

In order for your Debt Review to be successful, you need to understand that the process is as much your responsibility as it is that of your Debt Counsellors’ responsibility.

You must provide open and honest communication to your Debt Counsellor and ensure that the monthly Debt Review instalment is paid every month.

A vast number of South Africans have benefited greatly from this process and have been able to gain back their financial freedom.

If you wish to find out more about the process, please feel free to contact us.

SMA DEBT COUNSELLORS
031 464 0283
info@smadebtcounsellors.co.za
www.smadebtcounsellors.co.za

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