Frequently Asked Questions

Debt Counselling was formally introduced by the National Credit Act to help over-indebted consumers, especially in our current economic crisis. The goal of Debt Counselling is to develop a repayment plan which is affordable to you, as well as acceptable to all your credit providers. It is there to help you, so why not make use of it?
The consumer is not required to be present on the court date as the consumer is one of the Respondent’s meaning that if anyone should be required to appear on the said day it would normally be the Debt Counsellor as he/she is the Applicant in the application.
Debt Review cannot make you lose your home or your vehicle. It can however save your home and vehicle, but this will obviously depend on your unique circumstances. Factors that will determine this will include the following:
  • Have you received a Section 129 letter from your Credit Provider, and if so, how long ago? If you receive a Section 129 letter from your Credit Provider, you will have 10 working days in which you can obtain the services of a Debt Counsellor, who will endeavour to save the asset.
  • Have you been served with a summons in respect of your mortgage bond or vehicle finance?
The bottomline remains that you will always be in a better position to keep your home and your vehicle when you are under Debt Review, rather than trying to fight off the banks yourself.
It is never too late to get good advice. Even if one of your debts has a summons all your other debts are no doubt pressurizing you too. A Debt Counsellor can try make arrangements with your creditors even those who have a judgment or garnishee order. They might not be part of the Debt restructuring Court Order but will be taken into account in planning your monthly costs.
No, whilst you are under Debt Review, your Credit Providers will not be in a position to "blacklist" you. If the "blacklisting" took place before you applied for Debt Review, it will however reflect on your credit record. This is a further reason why you should rather apply earlier than later for Debt Review.
Unfortunately this would be a big problem with regards to your Debt Review, as you must make your monthly payments in respect of your debt repayment plan. Should this happen and you do not immediately get another income to satisfy your monthly instalment in terms of your debt repayment plan, you must contact us immediately, so that we can look at an alternative solution or you.
A debt counsellor helps over-indebted consumers to become debt-free and credit-healthy by way of the regulated debt counselling process. A debt counsellor must be a natural person – in other words, a company cannot be a debt counsellor – qualified by and registered with the National Credit Regulator. In terms of the National Credit Act, a debt counsellor may not work for a credit provider, debt collection agency or credit bureau. A debt counsellor is not a financial adviser and hence is limited to dealing with over-indebtedness and the restructuring of your debts.
Debt counselling is a regulated process whereby a debt counsellor negotiates, on your behalf, with all your creditors, to have the term of each credit agreement extended and the instalments reduced. Your debt counsellor may also appeal to your creditors to reduce the interest rate/s on your credit agreements so that you can afford to pay off all your debt as soon as possible.
It does unfortunately happen from time to time that some Credit Providers take a chance by making contact with our clients directly, but when that happens, you can merely refer them to your Debt Counsellor who will deal with the matter further.
Not at all. Provision is made in your debt repayment plan for all your insurance policies. In fact, if you have vehicle finance, you will be compelled to have insurance on the vehicle.
We never contact clients at work unless asked to do so.
Not all accounts on which you are charged interest are classified as “credit agreements” in terms of the National Credit Act (NCA). Municipal accounts, cellphone accounts, legal bills, school fees, and doctors’ and hospital accounts are examples of “incidental credit agreements”. With these types of accounts, the interest falls due only if you fail to pay for the goods or services on time, usually within 30 days. In effect, these accounts are treated as if they were a credit agreement only if you default on the payment and are charged interest. If you are over-indebted, your debt counsellor should be able to include incidental credit agreements in debt counselling. However, some creditors – mobile communications companies, in particular – argue that incidental credit agreements ought not to be included in debt counselling. Kedilatile Malakalaka, manager of debt counselling at the National Credit Regulator (NCR), says in terms of section 86(2) of the Act, credit agreements (including incidental) where legal steps have not been taken should be included in a debt review. “Non-compliance by credit providers in this regard should be reported [to the NCR],” she says. The Act caps the interest rate that can be levied in terms of an incidental credit agreement. It is currently two percent a month. The Act defines an incidental credit agreement as an agreement in terms of which an account was tendered for goods or services that have been provided to a consumer, or for goods and services that are to be provided to a consumer over a long period of time, and where either or both of the following conditions apply: A fee, charge or interest became payable when payment of an amount charged in terms of that account was not made on or before a determined period or date; and/or Two prices were quoted for settlement of the account, the lower price being applicable if the account is paid on or before a determined date, and the higher price being applicable due to the account not having been paid by that date.
Debt review is not a credit agreement, therefore allowing clients to rent property if they are under the process. Ctrl Debt Delete can provide a letter to the clients letting agent or landlord indicating the amount needed for the rent payment is available in the clients budget. The vast majority of agents will accept this, therefore please notify Ctrl Debt Delete if there are any problems in this regard.

Debt review and debt consolidation are personalised debt management solutions. The choice on which one to use and which one may be more beneficial, is dependent on your personal debt situation.

Ask yourself the following questions:

  1. Are you experiencing financial problems?
  2. Are you struggling with debt and loan repayments?
  3. Are your accounts in arrears?

If you have answered yes to at least one of the above questions, then either debt counselling or debt consolidation may be the answer for you. Deciding which one is better, is generally the hard part.

Debt review, one of Ctrl Debt Delete viable debt solutions, allows you to consolidate your debt without having to take out a loan. Whereas, the process of debt consolidation requires you to combine all your debts and take out a loan, to cover those debts.

With the process of debt review, Ctrl Debt Delete will assess your financial situation and find the best possible way to restructure your debt. Ctrl Debt Delete will negotiate your debt repayments with credit providers on your behalf.

Your debt repayments will be consolidated into one monthly repayment, which you will pay to an NCR regulated payment distribution agency.

The payment distribution agency will pay all your credit providers on your behalf. Ctrl Debt Delete will also ensure that your debt repayment terms are extended. Your bad credit records will be rectified once your debt repayments have been made.

Debt review can be considered as a better debt management solution as it can help a much wider variety of South African consumers.

If you as a consumer, have missed previous debt payments or have had legal action implicated against you, then a debt consolidation loan will not be an option, as no credit provider will lend you money at a reasonable interest rate that will be affordable to your specific financial situation.

Many debt consolidation loans have high interest rates, which will inevitably deteriorate the client’s financial situation.

For debt consolidation to work, consumers have to be sure that they are able to afford the monthly installment every month. This can only happen if the consumer manages to secure a loan at a lower interest rate than they are currently paying on the debts they wish to consolidate.

Because over 90% of Ctrl Debt Delete clients receive acceptances for lower interest rates and lower monthly repayments, the debt review process stands as a much safer option than debt consolidation.

In order for debt review to be rolled out, a court order has to be granted. The court order is put in place in order to legally protect clients from being hassled by credit providers, as well as to prevent creditors from taking legal action against them. Ctrl Debt Delete expert legal team, Dali Mantlana and partners attorneys are responsible for combining all debt review court applications from documents, which are completed and signed by clients, as well as their credit providers and the payments cascades that they have set up. All debt review cases must either go to the Magistrate’s Courts or the National Credit Tribunal, in order to be rubber stamped, as per the National Credit Act and granted a court order.
In terms of the NCA, credit providers are prohibited from lending to consumers while they are in debt counselling, unless the loan is a consolidation loan and does not result in greater indebtedness. When you enter into debt counselling, this is noted in your credit records (held with the various credit bureaus) and remains there for as long as you are in debt counselling. The effect is that you are not eligible for more credit until you are issued with a clearance certificate by your debt counsellor.

If you are married in community of property, you and your spouse must apply for Debt Counselling together, as the law sees your joint estate as one single estate. You both remain responsible for the repayment of the debt and you will both remain under the debt review process.

If you are married with an ante-nuptial contract, you can apply for Debt Counselling on your own. Your application will only cover your own income, assets and debts, but you must disclose if any of your assets or debts are jointly owned, i.e. not just in your own name.

Traditional African marriages are regarded as being in community of property, while Islamic religious marriages are regarded as being out of community of property.

Although debt counselling is supposed to protect you from litigious creditors, your creditors can withdraw from the debt counselling process after 60 business days of the date on which you applied for debt counselling. This withdrawal is called termination, and it occurs when a credit provider issues you with a section 86(10) notice. In effect, it means that the credit provider pulls its credit agreement/s out of debt counselling, and can proceed with legal action against you. This notice must be given to you, the consumer in debt counselling, to your debt counsellor and to the NCR. Section 86(10) of the NCA says that “if a consumer is in default under a credit agreement that is being reviewed in terms of this section, the credit provider … may give notice to terminate the review in the prescribed manner … at any time at least 60 days after the date on which the consumer applied for the debt review”. In addition to default, the common reasons for termination include:

The credit provider’s non-acceptance of the debt restructuring proposal put forward by the debt counsellor. If no court order has been obtained, the credit provider can withdraw from the process. Short payments, no matter how small the amount. If you agreed to pay your creditor, say, R500 a month and you pay even R10 less, you are in breach of the court order.

Yes you can apply for debt review with any registered Debt Counsellor within South Africa regardless of where you reside.
When assessing whether or not you are over-indebted, a debt counsellor will check for credit agreements that may have been entered into recklessly. If a debt counsellor believes that your creditors extended credit to you recklessly, he or she is obliged to issue a proposal to a magistrate’s court recommending reckless lending. (Note that this applies only to credit agreements entered into after 2007.) Even if the debt counsellor finds that you are not over-indebted, you may still be the victim of reckless lending. If this is the debt counsellor’s finding, he or she must give you written advice of your right to approach the court within 20 business days (from the date of issue of the rejection letter) to have the credit agreement/s declared reckless and to apply for an order to have your debts rearranged. Only a court can declare that a credit agreement is reckless. If a court does so, the credit agreement may be fully or partially unenforceable and the credit provider may lose all or part of the money advanced to you. This means that any money owed by you is no longer owed, and any money already paid is either refunded to you or forfeited. The court decides what is appropriate in the circumstances. Note that you can’t claim that you are a victim of reckless lending if you were not fully truthful when the credit provider did an affordability assessment on you. If the court or National Consumer Tribunal finds that you failed to provide truthful answers and that this significantly affected the credit provider’s ability to make a proper assessment, you lose your right to have the agreement declared reckless.
No, we will be able to advise you either way.

Sequestration is a legal process, which can be better understood by reading the following steps:

The Sequestration Procedure:

  • An advert gets published in the Government Gazette and the Burger. This will prevent further legal action against you
  • An Ability statement is drafted that you must sign before a Commissioner of Oath. This document is submitted for inspection at the Master of the High Court for 14 days or with the local Magistrate
  • Thereafter a registered letter is forwarded to all credit providers as notice of the surrendering of your estate
  • SARS will also be notified
  • At the day of the Court proceedings an Advocate will represent you
  • After the application has been approved and granted in Court, a Curator is appointed to handle all financial matters on your behalf
  • The Court Rules determine that you pay between 20c and 22c in a rand benefit to your creditors. In other words if you owe FNB R1.00, they should get 20c thereof. The benefit of this approach is that the repayment amount does not accrue interest
  • The client receives a document to list all household items. This document gets forwarded to the valuator to establish the value of the items. Your assets will be evaluated at a market related price

What happens to your vehicle during the sequestration process?

  • If your vehicle is under hire purchase, the Rule of Court stipulates that any bank may repossess the vehicle.
  • Should your instalments be up to date the financial institution may consider your request to keep the vehicle. There is no guarantee that you may keep your vehicle, especially should your vehicle be in arrears.
  • Vehicles registered in another person, or legal person, name will not form part of the estate

What are the disadvantages of sequestration?

  • You will be insolvent for at least the next 2 to 4 years.
  • There is circumstances where you can apply for rehabilitation after 18 months, this is an exception rather than the rule.You may not have a cheque account or credit card facility.
  • You may under no circumstances engage in any debt arrangements.

What are the advantages of sequestration?

  • Your salary and other income is still your own and you do not have to pay any creditor
  • Only your creditors are notified of the process and not your employer or any other person. You will not be discharged from your work because of it
  • You will not have to attend Court
  • Your curator can arrange with your financial institution to keep your vehicle and if your instalments are up to date

Prescription in South Africa refers to old debt, which occurs when it is no longer obligatory for a debtor to pay off their debt. Unfortunately, many South African’s are not aware that debt can prescribe. The Prescription Act 68, implemented in South Africa in 1968, enforces the regulation of prescription and states that debt can be considered as prescribed if the following requirements occur:

  • If in anyway, verbally or in writing, have failed to acknowledge the existence of the debt
  • If you have not made a debt repayment for that particular debt in the last three years
  • If you have not been summonsed in respect of the debt within a period of three years

If the debt has prescribed – You are not legally obligated to pay for it.

However, with regards to prescription in South Africa, it is important to bear in mind that not all debt prescribes in a period of three years. The following types of debt are likely to take an extended period of time to prescribe:

  • Judgement debt only prescribes after 30 years
  • Mortgage/Home loan debt
  • Debts owed to the state/municipality. E.g. Tax, Municiple Debt, TV licenses

It is perfectly legal for a debt collector or attorney to demand payment for a prescribed debt. It is up to a debtor to raise prescription as a defence. The purpose of prescription in South Africa is to compel creditors and collections agents to collect money owed to them within specified period and not delay recovery so that it accumulates massive amounts of interest and costs.

The fees are regulated in terms of guidelines set by the NCR. This means that, according to the conditions of their registration, debt counsellors agree to charge no more than the fees stipulated in the guidelines and disclose to you upfront all debt counselling fees and provide them to you in writing.

The fees are as follows:

  • An application fee. A fee of R50 is payable by anyone who applies to a debt counsellor for a debt review – this is an assessment of your finances to determine whether or not you are over-indebted and eligible for debt counselling.
  • Administration fee. A fee of R300 is payable by anyone who applies for debt review. This fee is for the consultation with the consumer, including explanation of the process and fee disclosure. As well as the F17.1 process and loading of details on the DHS system.
  • The application and rejection fees are the only fees that you must pay directly to a debt counsellor. All the other fees are worked into your restructured repayment, which is a single amount paid monthly to a payment distribution agency (PDA). A PDA is an entity accredited by the NCR to collect repayments from over-indebted consumers and to distribute them to credit providers (see point 5, below).
  • The debt counsellor’s fee – also known as a restructuring fee – is a maximum of R8 000 (excluding VAT) for a single application and R9000 (excluding VAT) for a joint application, or the first instalment of your restructured repayment, whichever is the lesser. This means that if your instalment is less than R800, your debt counsellor may charge you no more than the instalment.
  • After-care fees. In addition to the debt counsellor’s fee, you will be required to pay a monthly after-care fee, which is paid to your debt counsellor. This is five percent of your monthly instalment to a maximum of R450 a month (excluding VAT) for 24 months. Thereafter, it decreases to three percent of the monthly instalment to a maximum of R450 a month, until you’ve paid off all your debt.