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Debt review removal

Up until now, consumers could only exit debt review once a clearance certificate had been issued stating that all their debts were paid in full.

Amendments to the act now allow consumers to withdraw from the debt review process if:

  • A consumer has paid up all the debts that were listed in the court order or repayment agreement.
  • A consumer's short-term credit agreements listed in the court order or repayment agreement (including vehicle financing) has been paid in full AND the only remaining debt is a mortgage loan that is not in arrears in terms of the court order or repayment agreement.

VERY IMPORTANT: A debt counsellor does not have the legal power to terminate the debt review process. Consumers can withdraw from debt review only PRIOR to obtaining a debt review court order. If a court order has already been obtained, a rescission has to be filed, of which the full cost of application has to be paid by the consumer.

Can I withdraw from debt review once a court order has been obtained?

The most basic answer to this question, according to the 2015 withdrawal guidelines, as set out by the National Credit Regulator, is as follows:

  • Once a debt review court order has been obtained a consumer cannot terminate or withdraw from the debt review process. They can, however, approach the court to rescind the order or apply for an order which declares that the consumer is no longer over-indebted.
  • Upon receipt of the order, a debt counsellor will notify the credit providers of the withdrawal by means of Form 17.W and update DHS with status G.
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Advice on debt review withdrawal in Cape Town, South Africa

Technically, you can also rescind a debt review order that was made by order of the court. If you choose to do so, you will have to renegotiate payment terms with your creditors and make payments in respect of outstanding amounts personally. In cases like these, you have to be aware that your creditors may not be willing to renegotiate payment terms, since they don’t have the guarantee as underwritten by the debt counselling firm.

As for whether a debt counsellor can terminate the debt review process, the answer is a clear no. According to the official withdrawal guidelines as set out by the National Credit Regulator, "A debt counsellor does not have statutory powers to terminate or withdraw the debt review process. This means that a debt counsellor can no longer issue Form 17.4 and update DHS with status G (Voluntary withdrawal by consumer) or H (Withdrawal by a debt counsellor)." As such, the choice to withdraw from the debt review process will always have to be spearheaded by the client themselves.

It has to be noted that withdrawal from debt counselling is not recommended if you haven’t settled the bulk of our debts (aside from a sizeable one like a home loan), or your financial situation has changed due to an increase in salary or a steadier income. We know that it can be hard to tighten the belt and that you would do almost anything from some financial relief, but you’ve done all the hard work up until now – keep at it and reap the rewards of a clean credit record.

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We are often asked when consumers are allowed to exit debt review. Here is our concise answer to this complicated question?

Under the National Credit Act, you have the right as a South African citizen to have your debt review process cancelled even if your accounts have not been settled in full. This will however require a court application to prove that you are no longer over-indebted. Debt review exit can follow one of three scenarios:

All accounts have been settled in full

This is the simplest scenario. Once all your accounts that were subject to the debt review order have been settled, your debt counselling comes to an end and you will be issued with a clearance certificate.

All accounts have not been settled in full

You have to right to rescind a debt review order that was made an order of the court. If you choose to do so, you will have to renegotiate payment terms with your creditors and make payments in respect of outstanding amounts personally. Creditors may refuse to make these arrangements until the review order has been rescinded, so you may not know what you're letting yourself in for.

A good credit counsellor will assist you in assessing and evaluating whether you'll be capable to make these direct payments if you exit the review process. If all of your accounts that were included in the debt review agreement have been settled, apart from a home loan or other large credit agreement that is not in arrears at the time of exit (pertaining to the review agreement in place at the time), you are allowed to exit debt review with a clearance certificate.

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