Here’s an interesting take on a much debated, gray area. We’d love to hear your thoughts on this one.
Can I ditch a debt review?
TERMINATING a debt review agreement with your creditors can be tricky.
A Fin24 user writes:
I am currently under debt review and would like to resume my debt payments as usual – in other words, get out of debt review.
How do I do this?
Robyn Hersch, an independent debt management consultant at the Gauteng-based Debt Comm, responds:
Unfortunately, the National Credit Act is silent on this question. In my view, this is one of the Act’s greatest shortcomings.
The Act only mentions that once a consumer has paid off all their debt in terms of the debt review, the debt counsellor may issue a clearance certificate.
Thereafter, the consumer may apply to have the debt review order set aside. Consider the circumstances where a consumer has a bond- this could take 30 years, unless he has enough money to settle the bond sooner.
If we consider the circumstances where an individual is sequestrated, he is either automatically rehabilitated within 10 years of being finally sequestrated, or should his circumstances change to such a degree that would warrant earlier rehabilitation, he may apply to the High Court to be rehabilitated sooner.
Here, the burden of proof rests with the applicant.
As stated earlier, the National Credit Act is silent on this point. In addition, the Act is relatively new legislation, so this matter has not yet been tested in court.
Notwithstanding the above, I believe that it is not in the spirit of the Act that a consumer placed under debt review cannot apply to be “rehabilitated” (for lack of a better term) before all his debt has been settled. In my view, the following action can be taken:
1. Inform your debt counsellor that you would like to terminate the debt review process, as your circumstances have changed sufficiently so that you can afford the instalments in respect of all your debt as per the original contracts.
2. Before your debt counsellor does this, he should determine that you can actually afford the original instalment.
3. In addition to the original instalment, it is my opinion that you should show your creditors that you can afford to settle any arrear amounts (taking into consideration the initial contract). Alternatively, you can restructure the instalments to slightly more that the initial instalments, thereby paying off the arrear amount within a shorter period (say six months?).
4. Your debt counsellor should then notify all your creditors of your intention and your circumstances. He should also send through a revised repayment proposal as well as living expenses and salary details.
5. At this point, the creditors may agree to rehabilitation, or oppose it.
6. Either way, if a court order has been granted, you will need to go to court to make the “rehabilitation” an order of court.
7. Only once this has been done and the order granted, may your credit bureau status change.