The debt review application process
You are required to fill out a debt review application form (called Form 16), which is then submitted together with all your credit agreements to the debt counsellors of your choice.
Your debt counsellor takes all the information you supplied into account to see whether you are indeed over-indebted and if any of your creditors can be deemed reckless for having granted you credit. This can take up to 30 working days.
Once your debt counsellor has agreed to take on your application, they have five business days in which to inform a) your creditors and b) the credit bureaus of your application. Each creditor is sent a prescribed form (Form 17.1) and asked to issue a certificate of balance (i.e. asked to supply a breakdown of what you still owe in terms of outstanding balanced, accrued interest, etc.) within five business days.
While this process is going on, you must continue repaying your creditors. To this end, your debt counsellor will tailor a repayment plan that will be submitted to a PDA (payment distribution agency).
Once your debt counsellor receives all the information required from your creditors, they will use it to determine whether you are indebted to the point where review is necessary. They calculate how much you can realistically spend on debt repayment and if you are indeed deemed over-indebted, they will follow the procedure as set out in the National Credit Act. This includes notifying the credit bureaus and your full list of creditors by sending then Form 17.2.
Next, your debt counsellor will work with you to draw up a repayment schedule that takes all your expenses into account. This plan must be submitted to all your creditors for approval within 60 working days of the date of application.
If the repayment proposal is accepted by all your creditors, your counsellor must obtain consent to put it into motion from the National Consumer Tribunal or a magistrate’s court, within 60 working days. If one or more of your creditors reject the payment plan, your counsellor must seek an order of the court or refer to a magistrate's court.
Once everyone has agreed on the new payment terms, your case will be assigned to a payment distribution agency. You will make a single monthly payment to the PDA, who will in turn distribute the funds to your creditors and provide you with a monthly statement of these payments.
Legal action during the debt review application process
Regarding legal action during the debt review application process, we have good news and bad news – if none of your creditors have taken legal action against you before the application process commenced you legally have 60 business days in which to come to an understanding regarding a payment arrangement without fear of legal action. However, if one or more of your creditors have already taken legal action regarding certain debts, you do not enjoy protection in this regard and these debts may be excluded from your debt review.
Get in touch & stay informed
And there you have it – the debt review application process in its simplest form. Do you have any more questions pertaining to the application process? Get in touch with a Libertine Consultants representative; we’re more than happy to walk you through it step by step.