Before the Amendment
The National Credit Amendment Act (NCA) introduced in March this year specifies when someone can exit debt review, if they wish to do so.
Before the NCA was amended, you were legally bound to settle all of your debts as agreed to in the revised repayment plan. This meant you had to stick to the monthly instalments, interest rates and terms that your debt counsellor arranged with your credit providers.
It also meant you had to wait until you got a clearance certificate before you could terminate or exit debt review officially. Moreover, if your home loan was included in your debt review application, you would have to settle this in full before you could exit.
How Have Things Changed?
Now, you are free to exit debt review once you have paid off your unsecured debts, even if you haven’t settled your bond in full. Although, your mortgage payments must be up to date. Also, you must show the court that you are in a stable financial position, if you want to exit debt review.
If you start earning more and want to exit debt review that is your prerogative. But, only if you haven’t missed any of your payments up until that point. Just remember, once you withdraw from debt review, your monthly payments will go up again and the original repayment terms will stand.
Who Do I approach?
Only a court may rescind your debt review order or grant you an order declaring that you aren’t over-indebted anymore, as your debt counsellor doesn’t have the legal authority to do so. In this way, you will have legally exited debt review!
Your debt counsellor will then issue a 15.W to your credit providers, notifying them of your withdrawal from debt review.
What Are My Rights?
You may be hesitant to enter debt review because it means handing money over to a debt counsellor, who then hands it over to a Payment Distribution Agency (PDA), who then distributes it to your credit providers. Meanwhile, you’re wondering if your money is actually going to get where it needs to go.
What you may not know is that the NCA allows you to make payments directly to your credit providers, if you would prefer to do this. In addition, the National Credit Regulator (NCR) states that if you choose to make direct payments to your credit providers, it doesn’t count as non-cooperation. As such, your debt counsellor can’t suspend your debt review services.
Tip: When applying for debt review, look out for a Form 16. Signing this form will mean committing to either paying via a PDA or directly to your credit providers. As a rule, make sure you know what you’re agreeing to before signing anything!
After the Exit
After you’ve made your grand exit from debt review, you’ll need to send proof of payments to your debt counsellor on a monthly basis, so they can keep these on record.
Lastly, you must get proof of settlement letters from your credit providers and then send these on to your debt counsellor as well, in order to be issued you with your clearance certificate.