December is arriving and as the jingle bells rock and the good times start to roll, it’s vital that you keep a watchful eye on your budget. It’s easy to get caught up in the huge ‘sale’ signs and the flashing lights, so we’ve put together some tips to help you keep your festive season finances right on track whilst under debt counselling.
28 November 2012
During 2011 there were many developments in the industry, such as key judgements that occurred in the High and Supreme Courts, as well as the launch of an industry agreed system call DCRS that allowed for agreed concessions from all the major credit providers. Here are some of the major milestones.
• DCRS launched in March 2011. The aim of this process is to get people struggling with their debt (over-indebted) into a better situation with a 5 year period. This is done by the credit providers giving concessions such as taking away the monthly admin fee (R57) and then increasing the payment term and reducing the interest rates depending on the type of credit agreement. As one of the first users and with a high solve rate, DebtBusters is finding this system a huge success and it is offering a fantastic opportunity for clients to be debt free in a much faster time than they would otherwise be able.
• Section 129 (Letter of Demand) decision was made by Supreme Court that if a consumer was issued with this prior to going under debt review, then this credit agreement would be excluded from the process. Although, DebtBusters did not think this made sense based on the content of the section 129, we have worked closely with the credit providers and have had major success in including these under debt review or getting a favourable relationship in place that the consumer can afford.
• Credit Provider Terminating Debt Review (also called a 86(10) letter) – in the High Court of South Africa a decision was made that a creditor could cancel debt review after the 60 day process even if there was a court date in place. This meant that consumers could not hide in the legal process which could become a long drawn out process and that the creditors could continue with legal action. DebtBusters have been one of the only debt counsellors to respond to terminations to either advise the creditor that payment is being made or to understand the reasons for the termination and how we can get it back on track.
• In Duplum – this phrase was in Roman law and has been used in South Africa for a long time, which has meant that interest can never increase the balance of your debt to more than double the principal at time of default. The problem was that other charges could be levied and it meant many consumers found themselves never able to get out of the debt trap. In 2011 the Supreme Court made a judgment that in duplum should be calculated using all the charges as per the National Credit Act, which meant consumers who have defaulted would be more able to repay the debt, without the balance continually increasing.
With judgments such as these we need to work with these and make sure we have arrangements in place that the consumer can afford and that the creditor agrees with. Once in place the key to keeping these going is by making the agreed monthly payment each month and communication if there are problems with payments.