Debtfree magazine february 2018 (large) by Debtfree Magazine

South Africaâ&#x20AC;&#x2122;s debt counselling magazine

COPING WITH

DEBT

STRESS February 2018 www.debtfreedigi.co.za

Do you enjoy change? Most people donâ&#x20AC;&#x2122;t. It is one reason why when their income drops, most people keep on spending more than they actually can afford as if nothing changed. This leads to growing debt and serious stress if you are not careful.

month, was the new NCR guideline on what they feel should be charged for debt counselling. We take a look at some of these changes and consider how they will impact on you. We also discuss some recent negative press about a Debt Counselling firm and how the show presented the NCR. Letâ&#x20AC;&#x2122;s just say it was a mixed bag and as an industry it is hoped that the overall effect is a positive one rather than negative one which casts the entire process into disrepute.

Change is irritating. Change is stressful. Change is the enemy. But every now and then we can get excited about change; a new piece of clothing, a new home, a new political leader or even a new way The Debt Review Awards process is underway and we catch up on some to earn income. of the latest info about that as well February has been a month of as local news about debt review and change. Love it or hate it these the economy. If you were unable changes have impacted on the to attend recent industry events we economy and on the industry in have some summaries for you so that a big way. The rand has reacted you donâ&#x20AC;&#x2122;t miss out. We also get a bit positively to the change of President, technical and dive into a court case the change of budget (including the that has a lot of people scratching change to VAT). Another significant their heads and wondering: Now change, which hit the industry this what?

All this change even made us change our plans for this issue. Seriously, who likes change? But if everything always stayed the same then life would be terribly boring. Cape Townians would love a change of weather. Many of us would love a change of boss or change of income. So, not all change is bad. And as the saying goes: â&#x20AC;&#x2DC;The only constant is changeâ&#x20AC;&#x2122;. We hope this month changes your situation for the better and brings you one step closer to a change in your finances. Perhaps even being debt free.

FROM THE

E D I T O R S DESK

SURE

Credit ProteCtion – debt review Applied to go under debt review? Restructuring your monthly expenses? why not insure all your accounts on the one Credit Protection? benefits offered •

death – we settle the account

•

temporary disability – we pay your installment for 12 months

•

Permanent disability – we settle the account

•

Critical illness – we pay your installment for 3 months

•

retrenchment – we pay your installment for 12 months

At a rate of R2.95 per R1000 unsecured/short-term credit and R2.00 per R1000 on Mortgages, you can now insure your debt for less without compromising on the best benefits available. For further information please speak to your Broker alternatively contact your regional ONE office. 0861 266 562 admin.debt@one.za.com TERMS & cONDITIONS APPLY ONE Insurance Underwriting Managers (PTY) LTD Reg No. 1996/008987/07

Underwritten by:

A Member of

A member of the

Authorised Financial Services Provider FSP8783 VAT No. 4370160501

Group

DEALING WITH FAMILY DEBT STRESS

NCR DC FEE GUIDELINE

BUDGET 2018

AMENDING THE ACT

SERVICE DIRECTORY

DISCLAIMER Debtfree Magazine considers its sources reliable and verifies as much information as possible. However, reporting inaccuracies can occur, consequently readers using this information do so at their own risk. Debtfree Magazine makes content available with the understanding that the publisher is not rendering legal services or financial advice. Although persons and companies mentioned herein are believed to be reputable, neither Debtfree Magazine nor any of its employees, sales executives or contributors accept

any responsibility whatsoever for their activities. Debtfree Magazine contains material supplied to us by advertisers which does not necessarily reflect the views and opinions of the Debtfree Magazine team. No person, organization or party can copy or re-produce the content on this site and/or magazine or any part of this publication without a written consent from the editorsâ&#x20AC;&#x2122; panel and the author of the content, as applicable. Debtfree Magazine, authors and contributors reserve their rights with regards to copyright of their work.

C O N T E N T S

BUDGET 2018 VAT increased to

15% FUEL LEVY

+52c/l

SINS TAX + R4.80 spirits + R1.22 cigarettes

SUGAR TAX kicks in from April 2018

MEDICAL AID Less tax benefit

#FEESMUSTFALL + R12.4 Billion for first year students

PERSONAL TAX

Lower brackets see slight relief

Everyone else PAYS MORE

DROUGHT + R6 Billion

GOVERNMENT SPENDING

SLASHED GOVERNMENT DEBT

STABILISING SOCIAL GRANTS

+ to offset VAT increase

DEALING WITH FAMILY DEBT STRESS

DEALING WITH FAMILY DEBT STRESS Researcher Jeffrey Dew conducted a study and found that couples who are in debt spend less time together and fight more. This makes them more stressed and less happy. These couples even argued for longer than other couples and these arguments are more likely to lead to violence. One of the leading reasons quoted as being a cause of divorce is disputes over money. Debt stress can destroy families. So, how can your family deal with the stress that comes from heavy debt?

DEALING WITH FAMILY DEBT STRESS

THE BLAME GAME Couples who have debt often think in terms of ‘your’ money and ‘my’ money; ‘your’ debt and ‘my’ debt. When one partner has more debt than the other then often we begin the blame game. Fighting over where the debt came from doesn’t make the debt go away. Instead it just makes you both unhappy. Rather, consider fighting debt as a family project. Even the kids can be informed (to a reasonable degree) and asked to be part of the solution. One father whose son asked him for a new bicycle was sad that he could not afford it due to their financial situation. After he explained to his son why they could not buy a new bicycle, he was able to give his son a second hand bicycle that belonged to the boy’s grandfather. His son was soon riding around happy and content. IDEA: Take time regularly to have a family finances meeting once a month. Serve a fun meal and keep the tone light and non confrontational. Keep the meeting short.

DEALING WITH FAMILY DEBT STRESS

TOO MUCH DEBT Sometimes it can seem like your debt is overwhelming. It may seem that no matter how much you pay the interest keeps you from making progress. You may feel trapped. Create a list of your debts. Focus on either the smaller ones or ones with highest interest. Try to earn a little more (as a family) each month so that you can add a little extra to your payments. If you have not already reduced your spending then look for ways to do that quickly. If you are not making progress donâ&#x20AC;&#x2122;t give up. It might be time to get help from a professional NCR registered Debt Counsellor. Many credit providers drop or cut out interest rates when dealing with consumers through debt review meaning you will actually be paying down your debt and not just the interest portion.

DEALING WITH FAMILY DEBT STRESS

DEBT ON THE BR AIN Has your whole life begun to revolve around your debt? Thatâ&#x20AC;&#x2122;s not good. It should be important but not the most important thing in your life. You are more than the debt you owe to other people. You have personal value. Your family is important. Your friends are important. Helping other people is important. IDEA: Make a list of all the things in life you really value (which money canâ&#x20AC;&#x2122;t buy). Once you have the list make a choice to spend a little more time each week on these things.

DEALING WITH FAMILY DEBT STRESS If handled correctly then dealing with debt can actually bring a family closer together than ever before as you tackle the situation as a team. Dump the blame game. Get help from a professional if you are struggling and focus on the really important things in life.

KIM ARMFIELD

AND ASSOCIATES

NCR RELEASE NEW DEBT COUNSELLING FEE GUIDELINE After many years, and a lot of pressure from struggling Debt Counsellors, the National Credit Regulator (NCR) has updated their guideline on Debt Counselling Fees for the debt review process. The new Debt Counselling Fee guideline has been favorably met by most in the industry and should not cost consumers much more in the way of costs> positively it allows for more sustainability within the industry.

â&#x20AC;&#x153;

The new Debt Counselling fees allows for aftercare fees to remain at 5% throughout the process

â&#x20AC;?

NEW DEBT COUNSELLING FEE GUIDELINE

RESTRUCTURING FEES There has been a somewhat meaningless increase in the cap for the upfront fees which will seldom come into effect and importantly will not hurt vulnerable low income consumers. The previous cap of R6000 now increases to R8000 or R9000 (joint application). The average restructuring fee in the industry recently seems to have been averaging out around R2500 â&#x20AC;&#x201C; R3000 for the majority of consumers. Thus this is the figure they would pay. There has however been a new administrative fee been added (R300) which will help cover some basic data capturing costs and which seems to set out what the NCR view as administrative functions including consulting with the consumer. The Fee guideline says that this fee is only collectable after proposals have been made to credit providers.

NEW DEBT COUNSELLING FEE GUIDELINE

AFTER CARE FEES The new Debt Counselling fees allows for aftercare fees to remain at 5% throughout the process, helping keep debt counselling practices sustainable. Previously the fees going to the Debt Counsellor dropped to 3% just when the workload increased, making it hard for Debt Counsellors to continue to offer quality service to consumers who were finally paying off accounts and ready to leave debt review.

We offer back office services to Debt Counsellors including: 17.1, 17.2, Capturing CoBs, sending your proposals and helping handle court or NCT applications. Our full call centre and payment division can help you reduce your overheads and cut staff expenses. Cell: 083 232 1908 | Tel: 086 722 7405 | Email: elmarie@dcoperations.co.za

www.dcoperations.co.za

This is a huge win for the industry after a scary initial draft proposal on the topic which would have seen aftercare fees drop even sooner rather than raise. While 2% of the consumer’s payment may make little significant difference to them (these fees come out of the monthly repayment which stays at a constant amount for the consumer) it is a huge difference to firms trying to keep a high level of aftercare. The aftercare fee is capped slightly higher than before R450/month (even if 5% of the full monthly repayment would be more. ie. if repayment were over R9000/month). NOTE: The guideline is specific in saying that these fees would cover helping consumers leave the process once their debt is paid. Withdrawing early from the process is also covered in the Restructuring Fee portion of the guideline and thus no phantom ‘cancellation’ fee would be allowable as some firms have tried to charge in the past.

A lot of work is done in debt review towards the later part of the process and the new fee structure seems to acknowledge this.

NEW DEBT COUNSELLING FEE GUIDELINE

RECKLESS CREDIT In addition, the NCR have tried to help incentivize the investigation of reckless lending by including a small fee to help cover administrative costs in the amount of R1500. While this is small in comparison to the workload involved, it is an improvement over the previous fee â&#x20AC;&#x201C; which was... nothing! According to the NCRâ&#x20AC;&#x2122;s 2009 Task Team report (also a guideline) every matter needs to be investigated for reckless credit even if the consumer does not ask (which is what the Act says must happen). The Portfolio Committee on Trade & Industry have also proposed a draft bill to change the NCA to require that Debt Counsellors investigate each account or face fines or worse. This new fee would help cover some of the basic costs.

Recently, most other parts of the industry (PDAs and Credit Providers) have been hit by reductions in fees. This guideline seems to buck this trend and allow for slightly better sustainability of debt review practices. The new Debt Counselling Fee Guideline does, as before, tend to incentivize helping high-end clients, with more debt, over the poorer consumer but the addition of the small R300 administrative fee will help cover the increased workload that all Debt Counsellors face daily. Keeping the After Care fee at 5% throughout may also help, somewhat, to offset the cost of increased workload as consumers near the end of the process. In the past there has been less incentive to keep clients in the process as the aftercare fee used to fall after 24 months. Icons made by Freepik www.freepik.com from Flaticon www.flaticon.com is licensed by Creative Commons BY 3.0

We appear in the following courts and act as a correspondent for Dc’s and their attorneys. ATLANTIS BELLVILLE GOODWOOD CALEDON CAPE TOWN WYNBERG CERES GRABOUW

HOPEFILED KHAYELITSHA KUILSRIVER MALEMSBURY MITCHELLS PLAIN MOORREESBURG PAARL PIKETBERG

ROBERTSON SIMON’S TOWN SOMERSET WEST STELLENBOSCH STRAND TULBAGH WELLINGTON WORCESTER

Please contact adri@kempdebruyn.co.za to enquire about our fees.   

+27 (21) 200 5644 adri@kempdubruyn.co.za 21 Station Street, Paarl, 7646

NEW DEBT COUNSELLING FEE GUIDELINE

NCT SUBMISSION FEE The fee is now set at R500 and specifically says that the application costs which the NCT charge are not included. This is good as the NCT can change its fees over time. At present the NCT are only able to hear consent matters.

NEW DEBT COUNSELLING FEE GUIDELINE

ATTORNEYS FEES In the past, the law society was not happy that Debt Counsellors were told by the NCR to charge a â&#x20AC;&#x2DC;legal feeâ&#x20AC;&#x2122;. This has now had a cosmetic name change and a suggestion is made to try align the cost to what the consumer pays each month toward their debt. Because attorneys charge different rates it is impossible for the NCR to set a limit to these costs. The NCR advise that consumers agree to a written fee structure upfront so that they know what the costs may be. A new feature is that the NCR direct that if all credit providers quickly agree to the Debt Counsellors plan (hopefully within the first month) then

this fee would not apply. So, if Debt Counsellors obtain a consent order via the NCT then legal fees may not be chargeable (or would be refunded to the consumer). With the new focus on reckless credit investigation it is likely that consent orders will drastically reduce. It is specifically mentioned that the funds are payable to the attorney.

NEW DEBT COUNSELLING FEE GUIDELINE

WHEN? Like many other changes (such as the budget speech announcements) the new fee guideline applies as of April 1st 2018 and would not apply retrospectively. Please note that while the guideline reflects the NCRâ&#x20AC;&#x2122;s view on what fees could be charged it is not legally binding and each Debt Counsellor and client can decide on a fee structure and agree to it in a contract. For example the Debt Counsellor could decide to charge less than the guideline in order to be competitive. The guideline does, however, advise consumers of what might be considered an industry norm.

DEBT COUNSELLING FEE STRUCTURE 2018 STEP

DEBT COUNSELLING FEE STRUCTURE 2018

STEP

SERVICES

AMOUNT (excl. VAT)

SERVICES

AMOUNT (excl. VAT)

BY WHEN IT SHOULD BE PAID BY WHEN IT SHOULD BE PAID

3. Determination Fee: 3.1 Restructuring Fee: Fee 3. Determination 3.1 Restructuring Fee

(a) (a) Proposal preparation;

(a)

(b) (a) Proposal preparation;

(c) (b) (d) (c) (e) (d) (e) (f) (g) Transferring the consumer; (f) (h) Instructing the attorney to draft the application/collating (g) court Transferring the consumer; and filing NCT****application; (h) Instructing the attorney toand draft the (a) Withdrawal by consumer (Form court application/collating and 17.W filingprocess). NCT****application; and (a) Withdrawal by consumer (Form 17.W process).

(b) whichever amount is the lesser. (b) whichever amount is the lesser.

(a) (a)

(b) (b)

2 2

Payable in Month 2 after completing the written outcome of the reckless lending assessment.

(a) (b)

(a)

(a) (b)

(a)

(b)

(c)

THE DEBT COUNSELLING FEE GUIDELINES 2018 2

NEWS R AND STRENGTHENS The resignation of former President Jacob Zuma and the appointment of new President Cyril Ramaphosa was reflected in a strengthening of the Rand (vs the Dollar) to rates not seen for many years. Shares on the JSE also traded strongly in the wake of the change. Ratings agencies have thus far held off on making any promises but increased consumer and investor confidence will have a short term positive effect on the economy.

VAT INCREASES FOR THE FIRST TIME IN 25 YEARS The February 2018 budget speech saw the raising of V.A.T for the first time in 25 years as government introduced new taxes, cut tax relief and increased both the Fuel levy and Sins taxes. Value Added Tax will now sit at 15% as opposed to the old 14%. Consumers should expect to be hit by higher prices at the shops as a reaction to the increase fuel prices. Fortunately for those receiving grants, a slightly higher than normal increase was allowed for to help offset the VAT increase. Free tertiary education was also a big focus of the budget. [for more info see article in this issue].

NEGATIVE PRESS FOR DEBT REVIEW FIRM MSA & NCR An expose’ by Checkpoint has focused in on the plight of some consumers trying to remove themselves from debt review with MSA Consultants. The show was not complimentary and labeled consumers interviewed as ‘victims’ of the firm. Footage was shown of interactions with consultants who hung up on consumers and focused on what appeared to be bad service (for example being left on hold or refusing to provide voice recordings, or told debt review is a “savings programme”). Consumers told of how they had paid various amounts from R3000 or R900 (twice) to R300 to try get out of debt review with no effect. The consumers in the show claimed they had been put under debt

review without their consent. The firm offered to provide a written statement and perhaps an interview later but during filming these never became available. The producers then interviewed the NCR about the matter and asked why it was taking so long to action complaints from consumers about the firm. The picture painted was not positive. Another Debt Counsellor who was interviewed during the show (and portrayed in a much more positive light) pointed to the legal requirements of the NCA and best business practice. The MSA website is currently very empty and the topic was avoided at the NCR Conference.

The Annual Debt Review Awards recognizes excellence in debt review by Debt Counsellors, Credit Providers and Payment Distribution Agencies. Each year thousands of NCR registered parties are invited to participate in an industry peer review. The results are announced during June each year at a black tie Gala evening. The gala evening will be held in Cape Town this year (Day Zero has been pushed back) and consumers, Debt Counsellors, Credit Providers, PDAs, Credit bureaus and government officials will all attend to hear the results of the peer review.

Due to some excellent suggestions that were made this year will see a few extra awards given out in a few expanded categories. For example, Debt Counsellors will now be considered in the following 5 size categories (in the past there were only 3 size categories): 100 clients or less 100 â&#x20AC;&#x201C; 300 clients 300 to 1000 clients 1000 clients â&#x20AC;&#x201C; 4000 clients 4000 clients and above This means that since the Top 5 in each category is announced that an additional 10 Debt Counsellors will be recognized for their hard work this year. For more information on what criteria are considered during the process and who falls into what category you can visit. www.debtreviewawards.co.za

SECURE DISTRIBUTION SECURE DISTRIBUTION DEBT REVIEW FUNDS DC DEBT Partner REVIEW takes pride FUNDS in providing accurate and timely distributions. DC Partner takes pride in providing Distributions are done strictly according to accurate and plan timely distributions. the distribution provided by the debt counsellor. Distributions are done strictly according

to the distribution plan provided by the debt counsellor.

DR AFT NCA AMENDMENT BILL

AMENDING THE ACT The Portfolio Committee on Trade & Industry have been hearing public presentations in regard to their proposed amendments to the National Credit Act (NCA). The public hearings were held in Cape Town at Parliament. A big part of the Bill is the creation of a type of debt review to be done by the NCR and writing off debt for some types of vulnerable consumers after several years of being unable to pay. Various interested parties were able to make oral submissions about the Bill. The intention of such hearings is for all parties to point to possible issues and discuss how to address them. Over the last few months various parties have also been able to make written submissions on the Bill. Consumers, Government agencies, Consumer Rights organizations, credit providers and Debt Counsellors all took the chance to make oral submissions before the committee members, who then got to ask them questions about their presentations.

There were a few parties who were complimentary about the Portfolio Committeeâ&#x20AC;&#x2122;s intention to assist poorer credit users. Among these were the NCR, NCT and DTI who ironically came under serious fire from the Committee for raising some issues and then not offering any constructive comments on how these might be addressed in their 12 slide presentation. In fact, the Committee kind of climbed into them rather strongly. The presentation suggested that a lot more research be done to ensure that the new Bill fit with present legislation and the constitution. At the same time, the NCR asked that their CEO rather than the Minister of Finance be empowered to decide who would qualify for special relief. Others who were very concerned about some proposed changes to the NCA pointed to various legal issues with the draft Bill. These included constitutional issues and concerns over the NCR and NCTâ&#x20AC;&#x2122;s ability to effectively carry out the envisioned work of Debt Intervention. Credit providers, in particular, say that if the Minister of Finance can suddenly write off debt for huge chunks of the population (MFSA and BASA were talking about 5 Million people) they would struggle to evaluate

Jothie Bechoo ATTORNEYS & DEBT COUNSELLOR

Taking care of all your legal needs Specialising in Debt Review Applications for Debt Counsellors/Attorneys

We aim to have debt review orders granted at the first court appearance

Our offices personally attends to debt review applications in the following courts:

We avoid unnecessary adjournments

Durban Pinetown Chatsworth

Verulam Ntuzuma

Our fees are reasonable We have six yearsâ&#x20AC;&#x2122; experience in Debt Review applications We assist clients in Rescission of Debt Review orders & administration orders

Suite 7 Gladstone Court 103 Smiso Nkwanyana [Goble] Road Morningside Durban Tel: 031 303 1004 Mobile: 076 835 2810 Email: jbechoo@jb-attorneys.co.za Also specializes in: Deceased Estates, Wills, Divorces, Ante Nuptial Contracts, Correspondent Attorney, Rescissions

the risk of loss of revenue. They may have to stop offering these consumers reasonable credit, forcing consumers back into the arms of unregistered loan sharks. Alternatively, they may be forced into challenging the amendments at court level. The constitutionality of various proposed amendments was repeatedly raised. Debt Counsellors offered their services to help since they feel the NCR cannot realistically be expected to do even some of what is asked without millions more in funding and doubling or tripling their staff compliment. National Treasury and several other parties (including the banks) were also in favour of extending the current debt review frame work to suit the needs of these low income credit users. Debt Counsellors indicated that they are also weary of the reporting of possible reckless credit being made into a criminal offence if not done. All in all, the majority of oral submissions pointed to huge issues with the draft bill as it stands. This lines up with the various written submissions which echo these sentiments. It seems the Portfolio Committee will have to strongly consider various changes or should they decide to go ahead as is face huge push back from almost all in the credit industry.

donâ&#x20AC;&#x2122;t be a twit

http://twitter.com/Debtfree_DIGI

Die Republiek van

SKYT AFRICA Hi Almal, Alhoewel hierdie nie n politieke forum is nie sal dit krimineel wees om die woelinge die afgelope tyd rondom die politiek te ignoreer maar laat ek dit eerder beperk tot die doel van hierdie tydskrif naamlik skuld en finansiële probleme. My vraag hierdie maand is die volgende. “Hoe lank en hoe vêr kan jy stap met n klippie in jou skoen?” Enige normale denkende mens sal tog dadelik die skoen uittrek en die klippie verwyder voordat jy later kruppel moet loop om oor die weg te kom, jy gaan tog nie hinke pinke voort ploeter nie. Maar nou wat het dit met die politiek te doen sal jy my afvra? Vir die afgelope 9 jaar het die land van ons n klippie in sy skoen gehad met bykans verwoestende finansiële gevolge. Behalwe vir bedrog en diefstal bereken ekonome hierdie klippie het ons so veel as R1Triljoen Rand in finansiële welvaart gekos. Die Staatkas is bankrot en daar is n

helse hoop skuld wat gediens moet word, dit is nou net rente betaal never mind afbetaal en iewers moes daar geld gevind word. Die Begrotingsrede het dit duidelik gemaak dat verhoogde belastings en brandstofheffings (n heffing wat beslis voedselpryse gaan beĂŻnvloed) meer geld vir die Staatskas moet genereer, dus betaal ons uit ons gatsakke om tekorte regtestel. So wat is nuut? Ons belasting geld word in elk geval al jare gebruik om staatsbeheerde instellings soos ESCOM, TRANSNET en SAA se inkomste aan te vul, instellings wat veronderstel is om selfonderhoudend te wees. Die meeste mense is in n euforie sedert die klippie uit die skoen verwyder is maar sonder om negatief te wees was dit die enigste klippie? Al die amptenary, die hele spul van klerke tot die hoogste vlak onder wie se verantwoordelikheid die geplundery en bedrog met Staattenders is nog steeds daar. Tydens SONA is al die regte geluide gemaak en hopelik baar dit nie n muis nie, daar is n groot verskil tussen praat en doen! Ons kan net wag

en sien en hoop daad word by die woord gevoeg. Twee belangrike punte waaruit ons persoonlik kan leer is tydens SONA geopper. Jy kan nie jouself uit skuld uit leen nie en n lewensstyl oudit. Wat jou persoonlike finansies betref het ek die volgende vraag. Is jy die klippie in jou skoen? Sukkel jy voort sonder om daadwerklik iets daaraan te doen en hoe lank kan jy so voortgaan sonder om jouself verder finansieel te knak? Moenie dink dat jy skuld kan gebruik om skuld te betaal nie, jy gaan jouself net verder verarm. Tweedens doen n lewensstyl oudit, weens die Begrotingsrede gaan jy minder spandeerbare inkomste hĂŞ so beplan nou al reeds anders word dit nog n klippie! Praat met jou skuldberader, hy of sy is immers jou kenner. Laastens, weetend of onwetend het ons die afgelope 9 jaar die Staat se klippie in ons skoen gehad, moenie jou eie klippie byvoeg nie.

Groete en gaan julle goed!

Christo Hattingh Kyk gerus my LinkedIn profile: https://www.linkedin.com/in/christo-hattingh-351a52130/ * Seriously please do let us know if you found this article to be funny/offensive/amusing/interesting feedback@debtfreedigi.co.za

HELPING VULNER ABLE CONSUMERS Do you have Debt Review clients who you are worried about? Have you seen the cost of living shoot up beyond your clients increase in income? Are you worried they may fall out of the process without a little help? If you know of vulnerable but loyally paying debt review consumers who could benefit from some assistance please let us know. Are you thinking of ways to help debt review consumers? Letâ&#x20AC;&#x2122;s work together to ensure the right consumers get the right help and no funds are wasted. Become a DCCS Supporter

Contact admin@dccsupport.co.za

DEBT COUNSELLING COMMUNITY SUPPORT

COURT MATTERS

PHALADI V LAMARA

WITHDRAWING FROM DEBT REVIEW When a person applies to a Debt Counsellor for help with their debt then the Debt Counsellor notifies the NCR (who in turn notify the credit bureaus). The NCR keep a register of consumers who are under debt review. If a consumer owes more than they can afford to pay for their household expenses and debts at the end of the month then the person is Over Indebted. The Debt Counsellor tells the court that they think the person is over indebted and they court makes a declaration of over indebtedness. Only a Court or the NCT are able to do this. Neither the NCR, Debt Counsellor or Credit Bureau have authority, under the National Credit Act, to declare someone officially over indebted. Sometimes a consumer who has been under debt review may want to leave the process early since they can now afford to pay all their debts normally or have paid up all their debts. They might then want to be legally declared no longer over indebted so that they can once again get access to credit. This may be necessary since credit bureaus may not believe a Debt

COURT MATTERS

PROFESSIONAL DEBT COUNSELLING ATTORNEYS

T E L : 021 872 1968 1 1 MARKET STRE ET, PA ARL w w w.ste y nco etze e.co.za

When a person applies to a Debt Counsellor for help with their debt then the Debt Counsellor notifies the NCR (who in turn notify the credit bureaus). The NCR keep a register of consumers who are under debt review. If a consumer owes more than they can afford to pay for their household expenses and debts at the end of the month then the person is Over Indebted. The Debt Counsellor tells the court that they think the person is over indebted and they court makes a declaration of over indebtedness. Only a Court or the NCT are able to do this. Neither the NCR, Debt Counsellor or Credit Bureau have authority, under the National Credit Act, to declare someone officially over indebted. Sometimes a consumer who has been under debt review may want to leave the process early since they can now afford to pay all their debts normally or have paid up all their debts. They might then want to be legally declared no longer over indebted so that they can once again get access to credit. This may be necessary since credit bureaus may not believe a Debt Counsellor when they tell them the consumer is no longer over indebted or the consumer may have abandoned the debt review process midway but still have managed to correct their financial situation. There have been a number of court cases on the topic and recently there was yet another in the Cape Town High Court which has many people concerned. The case is Phaladi v Lamara and was heard during January 2018 by the honorable Justice Binns-Ward.

COURT MATTERS

PHALADI V LAMARA The case covered applications by Mr Phaladi and Ms Moshesha to be declared not over indebted after having been in debt review. They were however never declared over indebted by a Magistrates court as the applications never went to court. They were registered with the NCR and on the Credit Bureaus and through a voluntary arrangement (allowed for by the NCA) have paid off their debts. The ruling mentions several other similar cases in Gauteng and Cape Town. In some of those cases the courts made rulings that the consumers were not over indebted in order to help the consumer and exercise authority to remedy the lack of guidance in the NCA. In the Phalandi V Lamara ruling the court said: Its powers do not extend to improving legislation by providing measures or remedies that the statutory enactments do not afford,â&#x20AC;Ś to do so would be in effect to assume a legislative function and thereby trench impermissibly on the domain of the legislative branch of government. Since Debt Review is then created by the NCA specifically it is then necessary for the NCA to explain how someone is declared no longer over indebted. As the Act stands only at the start of the process can a consumer be said to not be over indebted. Nothing is included about what happens after this point. Since this is not included in the Act, the court found it was not able to make such a ruling and neither could a Magistrates Court (and that such a function should be administrative and not judicial in any case). The honorable Justice expressed disappointment that when the NCA has been amended in the past this issue has not been rectified along with other obvious numbering issues. Rather many guidelines have been issued. During the case the NCRâ&#x20AC;&#x2122;s non binding guideline on the topic was raised and the court simply mentioned that it was non binding and held no authority.

COURT MATTERS

Refering to the NCR guideline the ruling says: ‘In short, the NCA just does not make provision for the sort of application conjured in paragraph 4.2 of the Explanatory Note.’

WHAT DOES IT MEAN? The ruling for these consumers means that they are stuck as being shown as under ‘debt review’ even though their debt has been reviewed, has been voluntarily restructured and has been paid up. Until the credit bureaus remove the listings they will be prevented from gaining access to new credit (which may be a constitutional right). We asked attorney Wessel Symington, of Steyn Coetzee who practices in the Western Cape, for some additional information on what this all means. He said: “Since the inception of the NCA, the courts have been tasked with interpreting the purpose and effect of the Act and the various sections therein. In Nedbank v NCR the court stated: “ Numerous drafting errors, untidy expressions and inconsistencies make its interpretation a particularly trying exercise”. The impact of these inconsistencies has adversely affected the debt review industry and more so the consumers. The latest contrary views between the NCR withdrawal guidelines and various High Court judgments has been another example thereof.’ He then told us that: “In the Phaladi judgement the High Court states that an application to be declared not over indebted is just not possible. The TraceAnn Less judgement, of 22 September 2017 however, has a contrary view regarding the court’s jurisdiction in declaring a consumer no longer over indebted. The question that remains unanswered is when and by whom a declaration of over indebtedness must be made, either through judicial oversight or by a Debt Counsellor issuing a Form 17.2?”

COURT MATTERS

Mr. Symington said that this whole issue reminds him of the quote in FirstRand Bank Ltd v Seyfert which says: “A court is forced to go round and round in loops from subsection to subsection, much like a dog chasing its tail”. He grimaced and said that: “hopefully the dog will catch its tail soon with these contradictions.”

‘They do not qualify for relief under that provision, they are remediless. The courts are not empowered to craft a remedy that the statute does not allow for.’ ~ HON Binns-Ward

The NCR are revisiting their guideline on this topic but this case shows that these issues clearly need to be addressed in amendments to the NCA, such as are currently being discussed by the Portfolio Committee on Trade & Industry (where this and other issues have totally been ignored).

COURT MATTERS

All professionals have professional indemnity if the unforeseen happens. Do you as a professional Debt Counselor have professional indemnity as stipulated by the ethical code?

086 111 2882

TELEPHONE 0861 112 882 FACSIMILE 086 605 9751 MOBILE 082 449 6856 EMAIL andre@in2insurance.co.za

www.in2insurance.co.za

MELIORLEAF WONâ&#x20AC;&#x2122;T LOAD YOUR PREMIUMS OR REPUDIATE A LEGITIMATE CLAIM Specialist insurance for people in debt review. Ask your debt counsellor.

CALL US NOW 0861 635 467 www.meliorleaf.co.za

Debt Counsellors Collective

Public register of slow paying companies. Before you do business with anyone, click to see if they are listed

Donâ&#x20AC;&#x2122;t need an association but want a voice at industry level? info@moneyclinic.co.za

http://www.gentlereminders.club/

Visit our Facebook page www.allprodc.org

Visit our Facebook page and tell us about concerns you have over the Draft National Credit Amendment Bill https://www.facebook.com/BlackDebtCounsellorsForum/

www.bdcf.co.za

The National Debt Counselling

Regional Meetings Gauteng 13 March 2018 Free State 11 May 2018 KZN 18 May 2018 WCape 22 May 2018

Association (est. April â&#x20AC;&#x2DC;17) members collectively serve about 30-35% of the active consumer market. NDCA has contributed to CIF on topics such as professionalization of the industry, increased use of DCRS,

Check the website for upcoming regional meeting dates in other provinces.

and DC fees. NDCA also presented to Parliamentâ&#x20AC;&#x2122;s Portfolio Committee on the upcoming debt relief bill.

www.dcasa.co.za

DEBT COUNSELLORS

ASSOCIATION OF SOUTH AFRICA MEETING REVIEW

DCASA is the largest of the local Debt Counsellorâ&#x20AC;&#x2122;s associations and holds meetings in various regions throughout the year. At the recent meeting held in Cape Town, many Debt Counsellors attended as well as some credit providers. There were a number of presentations which updated the members about what DCASA has been up to recently on a national level, as well as, some updated info about the Credit Industry Forum (CIF). There have been changes on the DCASA NEC which were discussed. Also the NCR has announced that, at CIF level, they will be looking at the problematic withdrawal guidelines which have received much criticism over the last few years. There was a discussion about how one of the biggest banks has been refusing to stick to DCRS acceptances they have issued if one of the credit providers involved in a debt review do not themselves agree to the repayment plan. Some Debt Counsellors have said that they have received multiple acceptances with different balances. DCASA will be addressing this with the Credit Provider. Also discussed was the recent DCASA proposal to the Portfolio Committee on Trade & Industry about the proposed changes to the National Credit Act. DCASA suggested that the existing infrastructure of debt counsellors be used to assist with the process and not leaving it all in the NCRâ&#x20AC;&#x2122;s already overworked lap. Particularly of concern was the criminalizing of reckless lending reporting.

MA XIMUS BREAKFAST

Debt Counsellors use software to help them calculate how best to solve a consumers debt, to talk to credit providers and to help organize their own business. One of these service providers is called Maximus. During February, Maximus went on a tour of various cities across SA to meet with and present ideas to Debt Counsellors. The focus of the event was on how to improve profitability and also to introduce Debt Counsellors to some of the software features and services contained within the Maximus system. After a delicious breakfast where attendees got to talk to one another and relax while wearing giant white sticker name badges, the presentations began. Maximus has a working relationship with many service providers, some of whom made presentations such as Teleforge who help over 150 call centers across SA to run their telephony set up. Recently it was highlighted in a TV show that sometimes consumers ask to hear recordings of their conversations played back to them due to disputes. Is your practice able to do this? Do you have a system in place? Also discussed was the topic of digital signatures. There are 4 types of signatures and these were discussed, as was the technology behind digital signatures and how these can be useful at court. SignFlow are a service provider who can help you set up a system so that your clients can sign legally binding documents and court documents remotely via smart phones, tablets and computers. There we three presentations revolving around insurance. A presentation on how consumers can save funds via credit life replacement products by ZestLife. A discussion about short term insurance by Meliorleaf who have a fantastic Motor Replacement Policy which helps debt review consumers if their car is written off and a discussion about being FAIS compliant by JP Du Plessis of General Union. The well attended breakfast ended with a short presentation about how Maximus incorporates all these services with the click of a button and can do things like check if a person is already under debt review, can check their marital status with home affairs and can incorporate digital signatures.

STUCK

U S I N G

ANCIENT

T E C H N O L O GY ?

Contact Maximus on 011 451 0041 | www.dcmax.co.za

SERVICE D

CLICK THE C

DEBT COUNSELLORS

SUPPORT SERVICES

TRAINING

FINANCIAL

FINANCIAL PLANNING