Application

To start the process, you must fill in a Form 16. This form collects information about your current debts, expenses, income, and whether you’re married. Your debt counsellor will use this form to assess whether you’re over-indebted and whether your spouse should also undergo debt review. If you’re married in community of property, your spouse will also have to undergo debt, review since you share assets and debts.

Once you apply for debt review, you are entered into the debt help system, a database that tracks consumers under debt review and their progress. You’ll see a code A on your credit profile under the public records section. This protects you and creditors from incurring further debt when you’re a high default risk.

What We Need from You

Form 16 requests information about your income and employment stability: whether you have dependants, pay slip deductions, living expenses, debt obligations, and your reasons for over-indebtedness.

Personal Information

The form will request the details of your and your spouse’s contact details and whether you own a bond/property. This is because bond debt can affect how long you might be under debt review – if you can’t make bond payments, it will be included in your repayment plan, which can vastly lengthen your repayment term (unless you can pay it as initially agreed).

Employment Details

Form 16 will request information about how long you’ve been employed, whether you work part-time, full-time, or for yourself (to ascertain employment stability), and when you get paid. You’re not eligible for debt review unless you have a regular source of income, since you must make monthly repayments.

Income Details

This section asks how much you make each month, the income from assets and investments you get (such as rental income), and whether you have pension income.

Pay Slip and Expenses Details

We need to know about deductions from your salary (like tax, UIF, insurance, loans, medical aid, etc.), so we can calculate your net income. This influences your repayment capacity (how quickly you’re able to pay off your debt).

We’ll also ask for information about your regular expenses, such as school fees, insurance, groceries, and more.

Debt Obligations

Lastly, you must specify how much you owe each creditor, the credit’s interest rate, and your monthly instalments. This way, we’ll know how much we should expect to negotiate.

Assessment

Using the information you specified in Form 16, we’ll assess your debt-to-income ratio, income sources, and living expenses to ascertain whether you’re over-indebted. We’ll also obtain a copy of your credit report to see whether your debt is on the collections list and whether you have legal action against you. We can’t combat judgments, as we can only prevent potential legal action, not combat existing derogatory marks – if you’d like, we can recommend an attorney to contest a judgment or other order.

Once you’ve applied for debt review, you are immune from new legal action about existing debts. If you take out new debt, you are no longer immune and debt review may be suspended.

What We Need from You

We need you to be completely honest about all debts and legal action against or under your name.

Form 17

We’ll send your creditors Form 17.1. This form requests information about your current debts, such as the amount outstanding, insurance and fees outstanding, and whether they have initiated legal proceedings against you.  Form 17.2 (B) advises you and your creditors whether you’re over-indebted and can undergo debt review.

If you are assessed as over-indebted, your debt counsellor will issue a Form 17.2, which will notify your creditors that formal restructuring will begin.  It will also outline their debt restructuring proposal to reduce your repayments and interest rates. Form 17.2 also advises your credit providers to stop all debit orders (provided payment will be distributed via a PDA).

If you’re confirmed as over-indebted, a code C will be loaded onto your credit profile. If you’re not over-indebted, your profile gains a code B. Once negotiations start, your credit profile obtains a code D3.

Payments to creditors will start once you’ve paid your debt counselling fees. These fees have a predetermined limit set out by the NCA and NCR (National Credit Regulator).

Negotiations and Proposal Acceptance

Your debt counsellor will submit their proposal to the court tribunal, which will review your expenses and the plan, then make the final call on whether you’re over-indebted. If you are, you and your creditors will be issued with a Form 17.2 c.

Your debt counsellor will also issue a Final Proposal, which will advise your creditors that all of your luxury and unnecessary expenses have been eliminated and that your income and expenses have been impartially evaluated – essentially, that you’re doing everything you can to afford repayments and that debt counselling is necessary.

Once the court is happy with the arrangements that have been made, your credit profile will get a D4. Should the court not approve the debt restructuring plan, your credit profile will show a code G1.

Form 17. 2 (W) Debt Review Withdrawal Form

If the court or your debt counsellor determines you’re not over-indebted, you and your creditors will be issued a Form 17.2 (W). This is also the case if your application is suspended or rescinded. In this case, your credit profile shows code G.

Reckless Credit Assessment

This step is optional, but we highly recommend it if you know you were lent money when a creditor knew you couldn’t afford it. If you’re assessed as having been lent credit recklessly, part or all of your debt could be written off and your creditor could face legal consequences.

We’ll ask you for:

• A copy of the original credit application
• Your credit report at the time of application
• Past or current income at the time of application
• A copy of the signed quotation and pre-agreement
• The creditor’s affordability assessment
• Your repayment statements

We can help you get these documents. As soon as we’ve received these, we’ll make a recommendation to the court. Your payments will be suspended until an outcome is reached.

Monthly Payments

When the court has agreed to your payment plan, you’ll start to make monthly payments via a payment distribution agency, which will distribute your payment to your creditors fairly. These payments usually last for three to five years, but the process can be expedited by increased repayment capacity and lengthened by decreased repayment capacity.

What We Need from You

If you’re unable to make payments because of a change in employment or unforeseen circumstances, tell your debt counsellor. This way, we can submit the necessary information to the courts. If you merely default, your protection under debt review will cease and you’ll be subject to your initial credit agreements and their ensuing legal action.

Clearance Certificate

Once you’ve paid all your debts, your debt counsellor will issue you with a Form 19, or clearance certificate. You can use this to dispute the debt review flag, judgments, late payments, and defaults (everything that led to debt review) through a process called credit clearance.

If you’ve paid off all outstanding debts except your bond, your credit profile lands a code F1. If you’ve paid all debts including your bond, your profile obtains a code F.

To do this, you must write a dispute letter that includes Form 19, identification, and your written dispute. The bureaux have 21 days to review your dispute and provide an outcome. Once the flag has been removed from your credit profile (takes around one month or one billing cycle), you’ll be able to begin rebuilding your credit.