More and more people have been signing up for Debt Review over the last couple of years, especially during the Covid19 pandemic. Debt Review is a process that assists people who are having trouble paying their debts. It provides that a debt counselor contacts your creditors on your behalf and creates payment arrangements, lowering your monthly payments to a manageable amount.
As simple as the Debt Review process seems, should one note that there are important factors to take into consideration when entering the Debt Review process. One of those factors is the Debt Review withdrawal process. The National Credit Regulator (“the NCR”) published Guidelines 002/2015 for Debt Review Withdrawal. The instances below provide when a person can withdraw or be removed from Debt Review.
WHEN IS A CONSUMER ELIGIBLE TO EXIT THE DEBT REVIEW PROCESS?
Section 71 of the National Credit Act provides for the removal of the record of debt adjustment or judgment. It states a consumer whose debts have been re-arranged must be issued with a Clearance Certificate by a Debt Counsellor within seven days after the Consumer has –
- Satisfied all the obligations under every credit agreement that was subject to that debt re-arrangement order or agreement under that order or arrangement; or
- Demonstrated the Financial ability to satisfy the future obligations in terms of the re-arrangement order or agreement. Secondly, there are no arrears on the re-arranged agreements. Lastly, all obligations under every credit agreement included in the re-arrangement order or agreement have been settled in full.
Therefore, a consumer under debt review can only be issued with a clearance certificate when one of the following has happened.
A CONSUMER CAN WITHDRAW FROM THE DEBT REVIEW PROCESS AFTER A COURT ORDER HAS BEEN GRANTED
An application for rescission of the granted debt review Court Order needs to be made at the Magistrates Court requesting that the consumer be declared no longer over-indebted. Further, the application for recission must show to the court that the consumer was previously found to be over-indebted. Additionally, the application for rescission must advise the court that the consumer is no longer over-indebted and must include the consumer’s financial circumstances at that time in motivation of the aforesaid.
A CONSUMER CAN WITHDRAW OR TERMINATE THE DEBT REVIEW PROCESS BEFORE OBTAINING A DEBT REVIEW COURT ORDER
If your financial situation has improved to the point where you can satisfy all your creditors’ repayment obligations, the debt review process can be ended before a Debt Review Court Order was granted. It would be unfair and contrary to the spirit of the National Credit Act to classify you as being under debt review and/or over-indebted because you are no longer over-indebted and can now pay your creditors directly without the assistance of a debt counselor or debt review. A consumer will need to make a No-Longer Over Indebted application to the Magistrates court, wherein the consumer will affirm and prove that they can satisfy their debts without the Debt Review process. The court will then take into consideration the consumer’s financial situation and determine if the consumer indeed can satisfy his/her financial obligation.
Should you require any legal assistance in respect of an admission of guilt fine, please do not hesitate to contact us.