I am a consumer that has recently gone under debt review. My first two instalments went towards the fees for the process. Surprisingly, after getting a court order with the required monthly payments for each creditor, the debt review company added more legal fees resulting in the creditors getting less than the amount as per court orders.
As a result, the creditor terminated the debt review process and handed me to the attorneys. I have never missed a payment since undergoing the process. My question is, what action can I take against this company and make them accountable for defaulting on the court order and get the creditors to go back to the original agreement?
Debt review can be a highly useful tool for consolidating and addressing one’s over-encumbering debt. Before we can address your question, it is important to note the standard process for entering debt review so you can assess if all the appropriate steps were taken.
Entering debt review usually entails an initial meeting with the debt counsellor, who will gather as much information as possible regarding your debts. They will provide you with advice on the process and how best to proceed. If satisfied, you will enter into a contract with the debt counsellor which explains what the respective parties’ responsibilities are.
At the start of the process, the debt counsellor will assist you in setting up a realistic and manageable budget. From here they will start contacting the various creditors to negotiate new payment terms. An application is made to the court, and if the magistrate is satisfied with the proposal, a court order – known as a debt restricting court order – will be granted. Once this happens, the court order will be sent to all the creditors and the consumer is responsible for sticking to the payment arrangements.
The service of debt counselling falls under Section 86 of the National Credit Act (NCA) enacted in 2007. This section describes debt counselling as the advice given about your debt from a qualified debt counsellor. A debt counsellor is required to be registered with the National Credit Regulator (NCR).
When the debt review process fails due to miscommunication, an administrative oversight, or mismanagement of payments, this could result in the termination of the debt review and a consumer will be left without the protection provided by the debt review process. Should this occur, the credit provider will be able to proceed with legal action against the consumer.
The most common reasons for terminations may include:
- Where a consumer has been under debt review for some time, but no court order has been granted.
- Any short payments, no matter how small the amounts; strict adherence to the court order is required.
- Where the credit provider will not accept any proposals by the debt counsellor.
It is advisable that consumers are always aware of what is going on with their debt review as it is the responsibility and duty of both the debt counsellor and the consumer to ensure that all remains in order.
Consumers can do the following in order to avoid the termination of the debt review:
- Ensure the correct amounts and interest rates as stipulated in the proposal or court order are being adhered to.
- Always check your statements and if you no longer receive them be sure to request them from your credit provider.
- Stay in constant communication with your debt counsellor to be sure that everything stays on track.
Getting back to your question and situation – there has clearly been a failure in your debt review process.
Looking at the information provided, it would appear that the company may not have fully explained their process or cost structure when engaging with you which has led to this current situation. I recommend that you first try to lodge a complaint with the servicing company. Should the result be unfavourable, you may approach the Credit Ombud for assistance. The Credit Ombud will offer assistance on how to deal with problems and disputes relating to your debt counselling matters. Alternatively, you may also reach out to the NCR to assist you on the issues relating to your credit information and the debt counsellor.
The Credit Ombud’s office offers free services and consumers can call on 0861 66 28 37 for any queries or to log a complaint. The following details were provided on the NCR website:
Toll share: 0860 627 627 or 0860 NCR NCR
Registration issues: 011 554 2600
- Enquiries: email@example.com
- General complaints: firstname.lastname@example.org
- Debt counselling complaints: email@example.com
Request a workshop: firstname.lastname@example.org