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Debt Counsellors Durban – What Is a Debt Counsellor?
A debt counsellor is a person registered with the NCR (National Credit Regulator) and has the relevant experience and knowledge in order to restructure your debts in order to ensure he/she gives you a sustainable and affordable solution to paying your debt off.
What Is Debt Review or Debt Counselling?
Debt counselling is a legal process introduced by government through the NCA (National Credit Act) in order to assist people who are over indebted to balance their lives by ensuring they can survive comfortably on a monthly basis while ensuring they can pay off their debt is a reasonable period of time. With the emphasis on knowing how long it is going to take you to pay off your debt. With Debt counselling we ensure you have enough money for your living expenditure first and the amount that is left we use this to restructure new affordable payment amounts to your credit providers. We also try and re negotiate the interest rates in order to make the credit facilities more affordable.
Debt Counselling Durban – How Does My Debt Counsellor Get Paid?
In terms of the NCR guidelines no debt counsellors is allowed to receive any funds directly from a client besides a R50 admin fee and a termination fee should you wish to terminate the debt review. All funds have to get paid into a registered (PDA) Payment Distribution Agents account. This is for the protection of you the consumer as your funds will be accounted for and the NCR audit the PDA’s on a regular basis.
A debt counsellor has 60 business days to facilitate the process, this is 3 months. In month 1 the amount you have available to put towards your debt will be paid to the PDA, the PDA will pay this to the Debt counsellor for his once off fee for facilitating the process. In month 2 you pay the PDA, the PDA will then pay for the legal fees and from month 3 your credit providers will receive their distribution according to the proposal which the debt counsellor has put forward to the credit providers.
In terms of the law the maximum fee a debt counsellor can charge is R6000, THIS DOES NOT MEAN THAT IS WHAT YOU WILL PAY. It is a very fair process and the amount you actually have to pay towards your debt will determine the Debt counsellors fee. I will provide two examples for you to understand how this works.
Eg1) If you have R8000 to pay towards your debt on a monthly basis the maximum you can pay the Debt counsellor in month one is R6000.
Eg2) Say for example you only have R800 to pay towards your debt on a monthly basis, then your fee in month one that will go to the debt counsellor is R800. This is a once off payment that goes to the Debt counsellor for facilitating the process.
Debt Counselling in Durban – How Do I Pay My Debt Counselling/Review Payments?
Your Debt counsellor will give you a Debit order document to sign in order for the payment to come off your account monthly/weekly/fortnightly depending on how your earnings work. This debit order will take the funds from your nominated account and pay it directly to the PDA (Payment Distribution Agent) who will then distribute your funds to all your credit providers. The PDA keep statements and send full statements to the clients email address after distribution has taken place so you the client knows exactly who has been paid what amount and how your debt is reducing.
Debt Counselling Process – Are You Going To Consolidate My Debts?
Consolidation is taking one loan to settle many loans, this for many reasons is not a good idea. Debt counselling is similar to consolidation in the sense that you make one payment and the PDA (Payment Distribution Agent) distributes all the funds to your various credit providers. We as debt counsellors do not give loans, we re-structure your debt to make it more affordable.
Debt Counselling in Durban – How Long Will It Take For Me To Pay Off My Debt With Debt Counselling?
This is totally dependent on how much debt you have any how much you have available to pay towards the debt. For example if you have R10 000 debt and have R1000 to pay towards it, without interest it will take 10 months. If you have R100 000 debt and only have R1000 to pay towards it, it will take a long time. We will be able to give you the exact period once we have got all the actual balances from the credit providers and ascertained what you have available to pay towards the debt.
Will The Interest On My Accounts Decrease When I Am Under Debt Review?
In terms of the law debt counsellors are not allowed to change interest rates, this however does not mean that we cannot as many credit providers are open to negotiation with interest rates. We always try and reduce the interest rates wherever possible and as mentioned many credit providers are accepting this and allowing it. It must be noted however that certain credit providers do not allow reductions. This is where the experience of your debt counsellor is important as he knows who he can bargain with and who he must be more conservative with.
Debt Counselling Companies – What Happens When I Am Under Debt Review and I Cannot Make My Monthly Payments?
It is vitally important that the amount decided on for your monthly payments is an affordable and sustainable amount as your monthly payments must be made. If however there is an emergency eg death of a loved one etc and you can prove you had to pay for a funeral, we can send out a form 17.3 which is a change in circumstances notice. This will inform the credit providers of the event that has taken place and request leniency on the missed payment. The emergency should be provable and totally unavoidable as if it is not serious the credit providers can terminate the debt review as you will then be in breach of the new agreement put in place.
Debt Review Process>What Is The Difference Between Debt Review/Counselling And An Administration Order?
Firstly in order to go under administration your debt has to be under R50 000, for debt review there is no limit to the debt amount.
Secondly Administration does not give you a set time period of repayment and you will not know how long it is going to take to get out of the debt. The average period of administration is 30 years (meaning you will not be able to get credit for 30 years). With Debt review we give you the time period it will take to pay off your debt, this allows you to have something to work towards and gives you a target to focus on. You can of course pay your debt off in a shorter period should you be able to increase payments.
Can I pay my debt off quicker if I am able to.
If we for example advise you that your debt is going to take 5 years to pay off and during that period you get an increase or a lump sum and increase your payment then the period of the debt review will be reduced. It is in your best interests to pay it off in a quicker time period as you will pay less interest on the debt.
How do I know if I am a candidate for Debt Review
If you have any of the following
1) You are living on credit
2) You have no money to survive after your debit orders for creditor repayments goes off, and you have to continue to take loans to survive
3) Your debt continues to increase all the time
4) You are paying your debt by using other forms of credit. Eg using one credit card to pay the other
5) Your monthly repayments for debt are not affordable
6) You are missing payments for your debt repayments
7) You are paying less than the minimum instalment on your accounts
Can a garnishee order be placed under debt review
If the garnishee order has already been obtained then it is a valid order of court and cannot be over written by debt review. What we can do is try and ask for a reduction should the amount obtained in the garnishee be unreasonable. We would also take any existing garnishee orders into account when working out what amount you have available to pay towards the debt.