You may have seen some Debt Counsellors advertising that entering debt review stops legal action against you. Is this entirely accurate?
The National Credit Act (NCA) and industry agreements and guidelines from the National Credit Regulator do offer consumers who enter debt review with protection. It gives consumers a way to use the law to protect their assets. One such way is by going to court and getting a debt restructuring court order with the help of a Debt Counsellor (often called a debt review or debt counselling).
When consumers enter debt review notifications are sent to credit providers to tell them to stop their usual collections methods and refer the matter to their internal debt review departments (who are nice and friendly people who work closely with Debt Counsellors and really help consumers with great concessions).
If legal action has not started on the debts involved this normally means that no further legal collections actions will be taken. So, in a way: Yes. The promise of no further legal action is mostly correct.
It is good to remember however that just because a law (or guidelines) may be in place, it does not mean everyone will listen to it 100% of the time.
For example, there are laws against various crimes like theft. Does that mean that no one will ever steal anything? No. What it means is that if someone does steal something then you can go to the cops and they will investigate and hopefully catch the crooks and the law will then punish them.
When it comes to debt review something similar can happen. A credit provider (or their collections agents) may incorrectly start new legal action against a consumer who is under debt review. They shouldn’t but maybe at that point in time they feel they have a legal right to.
The good news is that with the NCA in place consumers (with the help of their Debt Counsellors and attorneys) are able to go to court and put an end to that legal action. At Court they can point out they are already in debt review. Are already paying back the debts every month and already have a debt restructuring court order in place (or on the court roll waiting to be heard).
Entering debt review doesn’t mean that you are 100% guaranteed to never face legal action over your debts because some collections agents or credit providers might make a bad (possibly illegal) call and still try something. Fortunately, the Act is there to offer you protection.
If you are in debt review and receive a scary legal collections letter or a summons then be sure to let your Debt Counsellor (and attorney) know so that they can use the provisions of the National Credit Act to protect you and your assets.
DEBT REVIEW SCHOOL
If behind on car payments: Never just give your keys to someone claiming to be from the bank! Beware of being tricked. Contact a/your Debt Counsellor at once if approached by any collections person.