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Considering Withdrawing From Debt Counselling?

Debt is a big responsibility and can be a heavy weight on your shoulders. But we’re sure you already know this since you signed up for debt counselling.

The process of getting your debt sorted can be long and frustrating, we understand that. We also understand that it could lead you to consider withdrawing.

Unfortunately, withdrawing is not as easy as it used to be. On top of this, it is not in your best interest, if you really think about it.

What are your reasons for withdrawing?

Before you go ahead and start the process of withdrawing from debt counselling, consider why you are doing it. Are the reasons you want to withdraw good enough to let go of the assistance that you’re getting from the counselling?

1. The debt counselling costs you some money every month

While this is a very understandable reason to want to withdraw, you have to really think it through. Have you considered whether you will be able to properly manage your debt on your own?

Maybe you’ve received a raise at work, or you’re in a better space financially, and this leads you to want to take care of your debt on your own. Theoretically, that sounds like a good idea. However, in reality, it may lead to you overspending, incorrectly allocating funds to certain areas of your life and so forth.

Sticking with your debt counselling keeps you on track.

2. You need to take out additional credit

Of course, there will always be a situation where you need more credit or you need to take out a loan. As we know, you can’t do any of those things while you’re under debt review.

This is the part where people misunderstand the process. Withdrawing from debt counselling won’t make it any easier. Even if you successfully withdraw, your records will still show that you’re under review and therefore you will still be unable to take out more credit.

3. The debt is taking a while to pay off

We recognise that the process is long. But, the process was set up this way to make it easy for you to get your debt sorted. Allowing you to pay only small amounts per month is what makes repaying much less frightening. The length of time will be worth it, as the massive monthly repayments will be off your back.

How does the withdrawal process work?

If you, at this point, find yourself still wanting to withdraw from debt counselling - let us take you through the process below.

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Before 2015, the withdrawal process was easy. All you had to do was contact your counsellor to request a cancellation. They would give you and all other necessary parties a voluntary withdrawal from debt counselling (17.4) form, and it would be over and done with.

Things are different now. In 2015, revised guidelines were issued. Debt counsellors can no longer terminate or withdraw a client from debt counselling. There is now a strict, and rather long, legal process to follow. Here are the updated regulations:

  • You may now only exit the debt counselling process if all the obligations in your original agreement are taken care of. This does not include home loans, which should be up to date in terms of payments.

  • You may approach a court to get a court order rescinded or apply for a new order to declare you are no longer indebted. But, you can only do this if a court order - that protects the re-arranged credit agreements - has already been obtained. When you get the order, the Debt Counsellor will let the credit providers know by issuing a form and updating the NCR system. Thereafter, your status will reflect on the Credit Bureau’s end and they will update your status on your end.

  • If a court order has not been issued and the form (which states that you are over-indebted and that the Debt Counsellor has accepted your request to go under debt counselling) has not been sent to the credit providers, then you may still request termination of the process. If the form has already been sent then you must approach the high court or get an attorney to obtain the form for the exiting process.

Note, however, that a debt counsellor can suspend their service if they feel as though the client is not cooperating.

As you can see, withdrawing is quite a tedious process - and you may even have to spend money on an attorney. None of this is ideal. On top of this, you will still be left to take care of your remaining debt, on your own, at the end of it all.

In Conclusion

Oftentimes people see the length of the repayment process or the fact that they can’t take out more credit, and then panic and try to withdraw from the debt counselling process. We’re here to let you know that you don’t have to worry. All the processes in place are there to help you, not hinder you. Together we can get it all sorted.

Contact DebtBusters for more information.

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