Summary and Instructions of the Debt Counselling Process

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SUMMARY AND INSTRUCTIONS OF THE DEBT COUNSELLING PROCESS

ONCE YOUR APPLICATION HAS BEEN RECEIVED AND YOUR CREDITORS NOTIFIED, YOU WILL BE PROTECTED BY THE NATIONAL CREDIT ACT.

1.  Always use a registered debt counsellor, with a good reputation. Our debt counsellors are registered since 2007, when debt counselling first started in South Africa.

2.  Obtain and complete the F16 Application form in detail. NO incomplete forms can be accepted or processed.

Note that the application seems quite intimidating if you look at it, but most pages are only information.

-  Make sure ALL the information requested is completed. This is a formal and prescribed process and all the information is needed. As no incomplete application can be processed, you will not have the protection of the National Credit Act, until we have all your information!

We don’t know you, your circumstances or who your creditors are – so we cannot complete the form for you!! Unfortunately, we will have to refer the application back to you, if it is incomplete.

Use the remarks column in the application to explain, or for any information you think could assist your debt counsellor. The more information we have, the easier it would be to help you and to motivate your application.

-  PART 1 – Personal details

o  When married IN community of property, BOTH parties must apply and both incomes must be declared. It is not “my” debt and “your” debt; it is “our” debt!

o  When married OUT of community of property, one or both spouses can apply. The information of the spouse not applying for debt counselling, will under no circumstances be provided to any of the creditors, or used in any documentation. Both incomes and expenses will however be taken into consideration, when working out the budget for the spouse applying.

o  If you are CO-INHABITANTS, both parties can apply on one application, if you

share income and expenses..

-  PART 2 – Income and expenses

§  Monthly income

ALL income must be declared, including salary, maintenance, interest, allowance, dividends, pension, rental income, and any other income.

o  Your yearly bonus will not be taken into account, when working out your proposal, but must be mentioned.

o  Irregular overtime or irregular commission will also not be used for the proposal (don’t add up with your monthly income).

o  Regular overtime and regular commission will be worked out on a 6 months’ average.

o  If your debt counsellor or creditors find out that you have not declared all your income, your application can be cancelled.

§  Payslip deductions

o  Please provide the Emolument Attachment Order, you can get from your HR department, if there is a garnishee against your salary. Also include in PART 4. We will try rescinding, or reducing the amount.

o  If your employer use abbreviations on your salary advise, please explain the abbreviations on payslip in remarks column – i.e. ABCD = Medical Aid.

o  In case of company loans, give the outstanding balance, and end date. Also, provide the e-mail address of the person dealing with your salary, if the amount outstanding is still high. We can try to include under debt counselling, especially if your employer is charging interest.

o  If your home loan, or any other accounts, is deducted from your salary, stop it immediately, as all accounts must be included into debt counselling. Your employer cannot refuse to stop the deduction. It also cannot have any influence on your housing subsidy.

o  If any deduction is only once off, please indicate and do not add, when you complete the application.

§  Payslips sometimes fax through poorly, so first make a copy, before you send it.

§  Even if you include your payslip, you MUST complete the information regarding income and payslip deductions correctly in Part 2.

-  PART 3 – Monthly commitments

o  A new, lower, restructured payment is calculated when we take your monthly income, minus your payment deductions and minus monthly expenses (your budget). What is left, the debt counsellor will use to work out an offer to your creditors.

o  There MUST be a reasonable amount left to negotiate new agreements with your creditors. There are minimum amounts the creditors will allow, as well as maximum terms they allow to extend repayment periods.

o  When you are married out of community of property/living in co-habitation, and only one party applies, it is going to depend if you are responsible for certain expenses, or if you share all expenses, where you are responsible for 50% of the expenses. Please indicate on the application form.

The party applying cannot declare one income and take all the expenses on him/her.

o  Where you have a contract, i.e. gym or cellphone, internet or any other contracts note end date of contract on your application. Also remind your debt counsellor when a contract ends, to see if pre-paid is not cheaper, or money can be used to pay off your debt.

o  Your budget must be sustainable. Don’t leave out necessary commitments and land in the same debt cycle again, when having to pay for this.

o  Expenses must be realistic. Creditors use certain maximums. They will also not allow very low expenses, which is not realistic.

If your parents contribute for instance to your grocery expenses, etc, note it on the application.

o  Don’t include luxuries, as your creditors won’t allow this. NO DSTV.

o  If your payments towards medical aid, policies and insurance are high, speak to your broker, or ask your debt counsellor to refer a broker. If these payments are too high, you will have less money for monthly expenses.

o  NB: Don’t include commitments already deducted from your payslip again.

-  PART 4 – VERY IMPORTANT TO INCLUDE ALL ACCOUNTS

o  Provide ONE account statement for every account. If you do not have the account information, phone your creditors, give your ID number and they will provide it.

We use the account statements, to make sure of the account number, or for contact details of a smaller creditor – if you however know your account number is correct, and you can provide the contact details of the you don’t have to provide statements, and can only provide the details.

o  Complete ALL information, as your debt counsellor must use this to inform your creditors.

o  You cannot include some, and exclude other accounts. You will not be able to explain to your creditors why you are prepared to pay some creditors outside debt counselling, while others must be prepared to reduce interest rates, waive fees and wait longer for their money – THIS IS NOT FAIR, while the Credit Act prescribes the process must be fair and transparent. Your debt review will be terminated in this case. ALL accounts must be included.

When we issue a clearance certificate at the end of your debt review, it will only be applicable to information on accounts under debt counselling. Other information will still reflect on your application, so make sure you include ALL your accounts.

o  If handed over to an attorney, list the information of the creditor, with the original account number, as well as the information of the attorney, with their reference number below. Bracket the accounts together, so we can.

We will first refer the account to the creditor, as in many cases they withdraw the account from the attorney and include it into debt counselling, and you will save on high attorney fees. If not, we will negotiate with the attorney.

o  List garnishee orders here. Get the emolument attachment order from your HR department (personnel office) and provide to your debt counsellor. We will try to rescind garnishee orders, or negotiate a lower repayment

o  The National Credit Act only make provision to include credit agreements. Overdue school fees, doctors’ accounts, overdue cellphone accounts, etc, are all service agreement – so there is no obligation on the creditors to include these account. We will however do our best to include.. Make very sure about the contact details of the service providers, and provide us with the latest statement, as many service providers refuse to provide us with balances. The moment a service provider starts asking interest, he is obliged to include the account. Also see below under General, paragraph 1, regarding legal matters.

o  Listing of outstanding balances, interest rates and monthly repayments. The information regarding outstanding balances and interest rates is not so important, as the creditors will provide this, when providing us with COBs (Certificate of balances).

You however MUST provide us with the ACCOUNT NUMBER and TYPE of account, i.e. personal loan, credit card, etc.

o  You MUST provide us with an e-mail address and telephone number of attorneys, debt collectors, micro lenders, doctors and all smaller creditors.

o  We have the information of larger and well known creditors, such as banks, clothing stores, furniture stores and all large lenders. You don’t need to provide their contact details.

o  When married out of community of property / living in co-habitation, the person not applying must not declare any of his/her accounts. ONLY the person applying.

o  Reckless credit

v  The Credit Act makes provision for a court to determine whether an agreement was recklessly granted, when entered into a new agreement after 1 June 2007.

v  If you were already over-indebted when granted more credit, note which account(s) might be recklessly granted.

v  The creditors have certain steps to follow, to make sure a consumer can afford more credit. If you can proof that you have provided all the correct information, and the creditor then did not took all necessary steps to make sure that you could afford more credit, a court could determine reckless credit and the agreement can even be declared null and void, and written off.

o  Prescribed accounts

v  If you have not made ANY payments for at least 3 years on an account, or did not sign any repayment agreement, made any promises, the account has prescribed and you don’t have to pay it any longer.

v  If a creditor however got a judgment, it will stand for 30 years and we will have to include it, to repay.

v  If you have made a payment, even R5, during the 3 years, the prescription period will start running from the beginning again.

v  Make a note, which accounts you think might have prescribed, so we can follow up.

-  PART 5 – Assets - List

-  PART 6 – Declaration

o  READ and make sure you understand and sign application. Also, make sure you have read and understand the Fee Structure.

3.  See front page of Application, for necessary documentation needed to be included with application.

If you do not have all the documentation available immediately, but have the information to complete the application, you can send the application to us to process - as from the moment you apply, you are under the protection of the National Credit Act, and the creditors will not be allowed to take any further legal action against you. Please provide the outstanding documentation as soon as possible afterwards.

4.  Pay Registration fee and fax / e-mail deposit slip, with Application.

5.  The debt counsellor will issue you with a Confirmation letter, stating you have applied for debt counselling, once your Application form was received, as well as more information of what you can expect from the process, and what is expected of you. After you have applied, you do not have to negotiate with any of your creditors any longer, your debt counsellor will.

6.  The total process for debt counselling is prescribed by the Credit Act and is a FORMAL process. We must handle EXACTLY according to the prescriptions and prescribed periods, regarding how and when what must happen, as well as when payments must be made. If not, the creditors can terminate the application and proceed with legal action.

7.  The debt counsellor must inform your creditors within five (5) working days of receiving your complete Application form, by way of a F17.1 form.

8.  The debt counsellor will determine whether you are over-indebted or not, according to the information you have provided in your application.

The debt counsellor will then issue a F17.2 letter, informing your creditors whether you were found over-indebted, or not.

9. When found over-indebted, the process proceeds. If not, a rejection fee of R300 must be paid (it is highly unlikely that you will be found not over-indebted, and since 2007 we have never rejected an application).

10. The creditors will issue the debt counsellor with a COB (Certificate of Balances), including outstanding balance, interest rate, monthly installment, fees, insurance, etc for each account.