It may sound strange but all Debt Counsellors want each of their clients to ultimately leave debt review.
This is uncommon in many businesses but in debt review the end goal is to have the financially troubled consumers get out of debt. Once they are out of debt they no longer need the help of a Debt Counsellor and the debt review process.
Some consumers, however, start the process and then decide they no longer want to be in debt review any more. This can happen for a variety of reasons. They might be good reasons or sadly (and perhaps more commonly) bad reasons.
GOOD REASONS TO LEAVE DEBT REVIEW
- Their financial situation has totally improved.
Eg. A couple may have entered debt review when one partner lost their employment. Now, after some time, the partner has received employment again. They can now afford to (1) catch up missed payments and then (2) leave debt review and go back to paying the old monthly payment amounts and interest rates and fees
- A person may have been placed under debt review incorrectly.
Eg. Somehow, a marketing firm might have informed a Debt Counsellor (and then the NCR) that the consumer had asked to be in debt review when, in fact, they had not.
BAD REASONS TO LEAVE DEBT REVIEW
The person wants to get deeper into debt
Eg. The person has not been able to adjust their spending habits and wants to make a purchase.They try to get more credit to do so but are told they cannot because they are under debt review. They mistakenly think that by leaving debt review they will actually be able to get more credit
The consumer thinks it is taking a long time to pay off their debts.
Eg. After taking years to get deep into debt the person grows impatient that their debt is taking long to pay off. Even though they have a plan show ing them how long it will take they forget to check it and track their progress each month. They foolishly think that leaving debt review will somehow make things better.
The consumer gets an incorrect statement from a credit provider and decides the debt review is not working.
Eg. The consumer gets a statement (or call) from one of the credit providers in the debt review who show them the incorrect figured owed because of computer or human error. Instead of asking the Debt Counsellor to resolve the issue (which takes time) they get desperate and decide to try to suddenly leave the debt review with all their credit providers.
The consumer signed up for debt review with a Debt Counsellor but never made any payments or followed through with the process. When applying for more credit recently they were reminded of this. As you can see there are many reasons why someone might decide they need to leave a debt review before the planned end date in your debt restructuring court order.
The best time to leave debt review, of course, is when all your debts have been 100% paid off and you are to tally debt free. You may, however, be in one of the situations mentioned above and be thinking about leaving the process.
Let’s consider how and when one can leave debt review and things you need to be very, very careful of, if you make this decision .
WHEN CAN A CONSUMER EXIT THE DEBT REVIEW PROCESS?
After the debt counsellor has made a determination of over-indebtedness but before the Magistrates Court has granted a debt re-arrangement order:
Section 87 of the NCA is applicable. A debt counsellor makes a determination of over-indebtedness when they issue a Form 17.2(b) to credit providers and update the credit bureaus via DHS.
A consumer who is not yet subject to a Magistrates court debt re-arrangement order in terms of section 87, may together with the proposal of the debt counsellor present additional facts
to the Magistrates Court to bring about a rejection of the debt counsellor’s initial proposal of over-indebtedness. This means that the consumer has to present to the Magistrates Court the new or additional facts to support the fact that he/she is not over-indebted and that he/she is able to pay contractual repayments, including any arrears that exist at that point in time. If the Magistrates Court nds the consumer not over-indebted, the debt review ends and the debt counsellor is required to update DHS to Status G1 to indicate that the consumer is not over-indebted. The debt counsellor should send out a Form 17 W(c) (Annexure A) accompanied by the order of the court to credit providers where the Magistrates Court has found the consumer not over-indebted.
The debt counsellor will charge the consumer debt counselling fees in line with the NCR Debt Counselling Fee guidelines applicable from time to time, and the consumer remains liable for the payment of these fees to the debt counsellor.
If the Magistrates Court finds the consumer over-indebted, the debt review process continues, and the consumer cannot withdraw from debt review.
After the Magistrates Court has granted a debt re-arrangement order:
Section 71 of the NCA is applicable. Once a debt re-arrangement order or debt re-arrangement consent order has been granted, the consumer can no longer withdraw from debt review.
The only way to end or exit the debt review is in terms of section 71 through the issuance of a clearance certificate by a debt counsellor once the all the substantive and procedural statutory requirements have been met.
For the sake of clarity, no process exists in the NCA that enables voluntary withdrawal from the debt review process after the consumer has applied for debt review in the prescribed manner and form.