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Posts Tagged ‘debt counselling’

A consumer that is over indebt can apply for debt counselling with a debt counsellor. The consumer will apply for debt counselling, because he is unable to make full installments on his debt.

The debt counsellor will assist the over indebted customer in the application process by negotiating a new affordable monthly payment plan for the customer. The first action the debt counsellor will take is to notify all creditors that the customer is applying for debt counselling. Secondly the debt counselor will notify the National Credit Regulator that the customer is applying for dent counselling. Th credit rating agencies will be notify by the regulator of the customer’s intension.

The credit report will show that customer is currently in debt counselling. Creditors may not borrow money to any person who is in debt counselling. A customer will stay in debt counselling until he has paid off all his debt or ends his debt counselling himself. The customer’s debt counsellor will notify the regulator and the regulator will inform all the credit rating agencies.

The credit rating agencies will remove the note on the customer’s credit file and the file will not show that the customer was in debt counselling. The credit file will only show if a customer is in debt counselling and not that he was in debt counselling. After a client completes his debt counselling there will be no trace on record that customer was in debt counselling.

We don’t know, if creditors will make notes of debt counselling, because debt counselling is still new to banks. The bank will obviously know that this customer was in debt counselling before if the bank was one of the customer’s creditors. Nothing stops the bank from making a note on the customer’s file that he was in debt counselling the the past. When the client applies for a loan again after debt counselling, they will know that this customer has been in debt counselling.

It is unknow if the bank will penalize the customer, because all debt was settled before the customer came out of debt counselling. So the bank might ignore this fact and only look at the customer’s current financial position.

Many people are feeling the pinch in the current economic climate, so don’t feel alone. With the current global economic crisis dominating the financial world, many people, if not all, are feeling under pressure. There is something you can do about your financial position however. There is debt counselling to help you with your debt situation and get you on your way to financial freedom again.

So what, you might ask, is debt counselling? Well, to put it straight to you, debt counselling is a professional service provided to those who are over-indebted, guiding the consumer to develop healthy financial habits whilst paying off all outstanding debt with more affordable payments each month. The main goal of debt counselling is to create a repayment plan for the consumer in order for a person to pay off all debt in an affordable manner which all the consumer’s creditors will be satisfied with. That way the over indebt individual will not get a summons by creditor and creditor will not have to write off any bad debt.

If you are seeking the assistance of a debt counsellor, begin by selecting one who has been accredited by South Africa’s National Credit Act (NCA). Once you are certain that you’ve chosen the correct debt counsellor, be sure to provide the debt counsellor with all the necessary documents, compiled and completed, that he might require.

The debt counsellor will determine your over indebtedness during your debt counselling session and then prepare an proposal that will be negotiated to your creditors as a starting point of the negotiations with your creditors. Once all the creditors involved are satisfied, the payment plan will be implemented and to ensure that it is followed through, regular reviews will be scheduled with your debt counsellor.

If you are struggling to keep afloat financially in these trying times, contact a debt counsellor for an in-depth evaluation on your current financial position. With the help from trained debt counsellor you will learn to enjoy the freedom that comes with a debt-free life by starting and applying for debt counselling!

Repossession of your House – one of the most traumatic events in any person’s life.

In the current economic climate it is distinctly possible that even somebody who is very careful with money can fall on hard times.

The bond repayment that was well within your reach when you bought the house has now become a commitment that you cannot manage – because of rising interest rates, and the price of fuel, food and other essential items.

Irrespective of the reason why you have stopped paying your mortgage – redundancy, death of the breadwinner, divorce, failed business venture, inability to refinance and many more – the bank will take action as soon as mortgage payments are not kept up to date, and will repossess your house if they feel you are unable to meet your monthly repayments presently or in the future.

What a wonderful relief it would be if you could go to bed again at night and fall asleep without this sword hanging over your head everyday.

The good news is that we can prevent the repossession of your house, if you are willing to work with us.

There are, however, a few things that you must understand beforehand:

The biggest mistake that property owners make who cannot meet their bond payments, is not to contact the bank in good time, but wait until the bank contacts them first. Many property owners then ignore the bank’s calls and letters.

Now alarm bells will ring at the bank immediately! If you see that you will not be able to make any month’s payment, you must contact the bank, explain your situation, and make an appointment to see them. It is in the bank’s interest to find a solution to the problem.

There are various possible solutions – each person’s situation is unique:

The bank may give you a payment ‘holiday’ until your situation has improved – like 6 months of paying only half the monthly amount, or 3 months of making no payments, depending on your personal situation.

You could extent your mortgage payback period to 30 years, or apply for an interest only mortgage (SA Homeloans, for instance offers interest only mortgages) which will bring your monthly payments down. This will give you more money in your pocket, but you will be paying more interest. You could change the mortgage repayment again after reorganising your finances.

Your accountant or financial advisor could give you financial advice (NOT an insurance broker!). They have seen situations like this before and might give you feasible ideas that can be implemented.

The consequences of not keeping up with your mortgage payments:

The bank will repossess your property if you do not keep up with your monthly payments, and do not communicate with them to find a solution. If a solution cannot be found, the bank will take steps to have the property repossessed.

Some people give up and wait for the bank to do the repossession. They think that all their financial worries will be over after the bank has repossessed the house – but as soon as your house has been repossessed, all your creditors will be knocking on your door.

Someone who has gone through repossession might be financially ruined for a very long time, because he will not be able to get credit.

When the house has been repossessed, the Sheriff will auction it. The bank will also be bidding at this auction. If the property is worth $1 000 000, for instance, and the outstanding bond is $500 000, the bank will bid at the auction up to a price of $500 000, and then leave the auction. If the bid is granted at $500 000, the bank will get their outstanding money back.

Don’t think you will get any money back after the auction, you might still be owing the bank. Many auctions, or most auctions do not go much higher than the reserve price that the bank has asked for. Now the owner has no house PLUS a bad credit record. He may not be able to get credit for a long time (talking in years!), and struggle to rebuild his life.

How we can help and assist you

The best action to take to prevent repossession is to sell the property to a reputable property investor and settle all outstanding debts as soon as possible. The property owner might have some late payments listed on his credit file – but not a repossession that might take years to repair or clear. He can rebuild his life again by starting afresh, and may soon be able to buy a property again.

We are property investors who will valuate your property and give you an offer to purchase within days. We will even settle your outstanding payments with the bank before the transfer has taken place. So you will not have to worry about a creditor every time the phone rings; or that the Sheriff or Bailiff will come knocking on your house front door.

Thanks to the NCA (National Credit Act) there is another way to save your house from repossession and that is Debt Counselling.

You can apply for Debt Review at any time. As long as your income is lower than your expenses and you have income every month. While you are in debt review or applying for debt review the bank may not repossess your property or any other asset in your name. You will have more time to reorganise your finances.

Our Criteria to help you:

We are not able to help everyone. There are certain criteria according to which we can help you:

We must be your last resort, and you must be willing to work with us to find an solution. First of all we must valuate your property to see if you have enough equity in it. Equity is the difference between the market value of your property and your outstanding bond. Should you meet the criteria, we shall buy your property for up to 70% of its market value.

We can also help with fast sales in cases where people are relocating abroad, or have been divorced or separated.

Applying for debt review is a simple process. You can send me an email to help you apply for debt review or you can contact me for more information.

Do not hesitate to contact Colin Brazendale at colin@prevent-repossession.co.za for support and help.

The National Credit Act (NCA) came into effect in June 2007 and with it came the process of Debt Review or Debt Counselling.

The consumer applies for debt review at the debt counsellor or consultant. The consumer must know the debt review process and the fees that go with Debt Councelling. Debt review will influence the consumer’s credit rating, but this is temporary while the consumer is in debt review. The consumer can opt-out of debt review at any time.

The fees must be explained to the consumer so that he or she knows the cost. Debt counselling is not cheap and can be expensive, but is far better than losing your house or car to the sheriff’s auction. In the current economic market you will only get halve of the value of your car or house price at an auction.

The consumer completes and signs a debt review application form after consultation with debt counsellor or consultant. The form is called a Form 16. Form 16 together with supporting documents is handed over to the debt counsellor or consultant. The form 16 must be completed with all details. All personal details must be entered as well as a budget will all details.

The budget is very important to the debt counsellor to determine if the customer is over indebt or not. Supporting documents are necessary to confirm account name, account number, address and creditor details with amount outstanding and monthly instalments.

The details on the form 16 are captured immediately. Within 5 days (normally sooner) all creditors are notified with form 17.1 that consumers is applying for debt review. The debt counselling application is now in progress. It is not possible for any creditor to take legal action now.

The debt review process takes 60 working days. The creditor has 5 business days to provide information on consumer. The debt counsellor will check the details he received from the consumer to see if the details are correct. The creditor is reminded to give feedback after five days.

Another 10 days grace is given to the creditor to reply to notice debt counsellor sent.

If the debt counsellor does not receive conformation from creditors, he may presume that the figure provided by consumer are correct. The debt counsellor will now determine if consumer is over in debt, in other words, is the consumer’s monthly expenses more than his or her monthly income.

The debt counsellor will now prepare a debt-restructuring proposal to the creditors. The proposal must be sent 25 days from date of application. All creditors have 10 days to respond. If there is no response, the creditors will get a reminder and another 5 days to respond.

The proposal will be sent to the Payment Distribution Agency to start the distribution to creditors. That is the debt review process in a nutshell.