Frequently Asked Questions | Diverse Debt Counsellors Durban

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Can I still take loans while under debt review?

No you cannot obtain any further credit while under debt review, it would be a pointless process if you continued to borrow money while trying to become debt free, that is like allowing two people to dig a hole, with one person throwing sand in while another takes sand out.

Do I get statements of all payments made?

Yes every month a statement will be sent to your nominated email address for every credit provider that was paid in that month. The statement will show you the opening balance, the interest, the current payment and the new balance. This is very important as it allows you to see where you are going.

Which is better Debt Review or Consolidation?

There is no doubt that debt review is a better option. The reason for this is that consolidation is taking one loan to pay all your other loans off, so in short you are merely transferring your debt from one person to another. The selling proposition for consolidation is that your instalment will reduce, but what they do not tell you is the interest rate for the loan is usually higher because you are a higher risk client. This effectively means the debt you have just transferred to somebody else will now grow at a quicker rate than what the original debt did. Debt review is a plan that allows you to settle your debt in the quickest period possible at usually lower interest rates at reduced instalment amounts. A far better option that gets you out of debt not placing you further into trouble.

What do I do if a credit provider phones me while I am under debt review?

: You can tell the credit provider you are under debt review and provide your debt counsellors number, if alternatively the person phoning is un co-operative take the persons name and number and reference for the call and send it to your debt counsellor who will phone or email them in order to sort out the query.

Can cell phone accounts be placed under debt review?

Cell phone contracts that have not been handed to collection companies cannot be placed under debt review as they are service agreements and not credit agreements, this however does not mean that we will not sort them out. What we do is get the balance and put forward an informal proposal to them and start paying in terms of this proposal until the agreements is settled. We are here to assist you and give you a full solution not a short term one.

If someone shows up at my house or work for me to sign documents relating to debt what should I do?

. Never sign any documents before either obtaining legal advice or discussing it with your debt counsellor first as you could be making your situation a lot worse. The only person that can ensure you sign documents is a sheriff of the court, the sheriff will always have proper identification. Please note many debt collectors or agents mis-represent themselves as the sheriff of the court.

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You will not be blacklisted, but the credit bureaux must indicate that you are under debt review. However, one you are finished with debt review, this notice will be removed and there will be no sign whatsoever on your credit reports that you were ever under debt review.

Can a creditor proceed with action against me once I am under debt review?

. Once a Consumer is placed under debt review, all legal action must stop. A Creditor may thereafter not proceed against the Consumer provided the Consumer is making regular payments to the Payment Agency as recommended by the Debt Counsellor.

What if a creditor does not accept the payment that is offered?

The Creditor can make a counter-offer and try and negotiate with the Consumer through the Debt Counsellor. If settlement negotiations cannot be reached then the Debt Counsellor must approach the court with his recommendations and ask the court to consider and grant these recommendations.


” hide=”yes” border=”yes” style=”default” excerpt_length=”0″ read_more_text=”Read More” read_less_text=”Read Less” include_excerpt_html=”no”]All debt review fees should be charged in accordance with the guidelines set by the National Credit Regulator, which are as follows: a) a fee of R50.00 for applying for debt review, b) a fee that is equal to your first months instalment, subject to a maximum amount of R6,000.00 [Your monthly instalment is determined after deducting your monthly expenses from your monthly income],c) an after-care fee of 5% of your instalment for a period of 2 years, and thereafter 3% of your instalment. There are usually also legal fees involved, which must be disclosed to you upfront and is deducted from your second months instalment.

If I have to pay the debt counsellors costs, how do I also pay my creditors?

Payment to the Creditors may be stopped for a period of up to 60 business days. The Debt Counsellors costs and legal costs are deducted from your first and second months instalments and your third instalment is then paid to the Creditors.

Can I pay extra towards my debt to settle it quicker

Answer: Yes most definitely, the object is to get you out of debt in the quickest period possible.

What's the difference between Debt Review 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.

What happens when I'm under Debt Review and I can't afford to 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.

How long will it take for me to pay off my all my debt with Debt Review?

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 debt increase while 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.

Are you going to consolidate my debt?

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.

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.
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.

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