Debtfree Magazine (Issue #4 of 2021) by Debtfree Magazine

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Issue 4 of 2021

I’m Feeling Lucky

EXCELLENCE IS DOING ORDINARY THINGS EXTRAORDINARILY WELL – John W. Gardner

WHAT MAKES US EXCELLENT? / Unimpaired and automated PDA systems / Integration with top-ranked Debt Counsellor systems / Enhancing Debt Counsellor efficiency and sustainability / Best customer support in the country – queries are resolved within 24 hours / Strong compliance and best-industry-practice implementation is at our centre

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FROM THE EDITOR The world can be a scary place. Maybe the aggression of the world’s super powers makes you nervous, maybe it is the mind blowing amount of people getting covid-19 in India’s second wave or perhaps it is fires in major SA cities burning down houses, residences and libraries. Is anywhere safe any more? When you have all that going on and suddenly a retailer tells you that owning the latest phone/pair of shoes/gaming consol/toothpaste will make your life better we become fascinated and foolishly buy into that sales pitch. Maybe a mountain of debt and a new asset is the key to happiness? And so, off we go accessing credit to have that thing now, rather than later, because we need to feel happy and safe now, not later. It takes most people a lifetime to realize that having lots of shiny things is not the path to happiness. Life is a little more complex than that. But the chance to reach out and perhaps grasp happiness in any form is so enticing. And let’s admit it things get stuck in our heads and we become consumed by them. I must admit I got a bit caught up in the internet meme come true: ‘the Josh Fight’ this month. I found it funny to think that someone who was just having a goof during lockdown saw something they were just joking about come true (If you don’t know anything about it, then why not Google it and have a laugh?).

Credit gives us a short cut to access things we want now. Paying off credit, of course, leaves us trapped for years or even decades. Debt review is one of those amazing provisions that helps people with debt be treated with dignity and reasonableness but once the process is started it hems you in. No more access to more credit to splurge with. No more missing debt payments, like in the past. It requires a level of discipline that is genuinely hard to maintain. So, many people think about leaving the process with much of their debt still weighing them down. We look into this in some detail this issue and also look at things consumers really need to be very careful to avoid. If you have been feeling a bit panicked and hemmed in by your debt review I can only say that it is important to remember it is your debt that is weighing you down and holding you back. Not your debt review. You may want to take a short cut in getting out of debt so you can be free now not later. It is really important that you realize that debt review is that short cut. Beware of leaving the process at the wrong time. You could be heading right into a whirlwind of disaster. So, educate yourself about your options and always talk directly to your Debt Counsellor before making any big decisions about such matters. Rather than all the shiny or negative things that may capture your imagination why not get fascinated by living a life where you have no monthly debt payments, no debt obligations, no debt. Fixate on it. Make it part of your daily thought process. If you can do that then you are truly on your way to being debt free.

E N I NL

14 June 2021 National Credit Regulator Debt Counselling Training Course CLICK HERE TO ENROL Contact us for more info: 012 434 2500 www.enterprises.up.ac.za

DEBT REVIEW LESSON #1

Your PDA statement is a history of the payments made. Please note that the balance shown might differ a little from that on the credit providers’ side.

PROFESSIONAL DEBT COUNSELLING ATTORNEYS Assisting With Debt Review Matters Nationwide WESSEL SYMINGTON TEL: 021 872 1968 w e s s e l @ s t e y n c o e t z e e . c o . z a w w w. s t e y n c o e t z e e . c o . z a

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Wessel Symington Steyn Coetzee Attorneys ‘‘The reason Zero Debt are industry leaders is that they get 80% acceptances on their initial proposals to credit providers, right away. They also make excellent use of the DCRS proposal system in negotiations with credit providers. Zero Debt regularly succeeds in convincing credit providers to reduce their high interest rates down to less than 5% on their client’s debts. This means that Zero Debt clients obtain their court orders and can pay off their debts quickly. They ensure dedicated clients get their clearance certificates and are soon able to start their debt free life. Zero Debt’s team are very experienced and highly professional. They work hard to ensure clients are totally debt free at the end of the debt review process.’’ 087 701 9665 help@zerodebt.co.za www.zerodebt.co.za

LEAVING DEBT REVIEW EARLY

EXITING DEBT REVIEW

“GET OUT OF DEBT REVIEW” SCAMS

SEQUESTRATION

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 editors’ 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

CONSUMER FRIEND USES SOFTWARE TO ENSURE

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POPIA COMPLIANCE IS CRUCIAL THIS YEAR!

BREAKING NEWS

NCR & CREDIT OMBUD TEAM UP The National Credit Regulator (NCR) regulates the credit industry including all the banks and anyone else who offers credit (non banks). When it comes to the banking sector there is a Banking Ombud and for non banks there is the Credit Ombud. These Ombuds have jurisdiction in terms of the National Credit Act (NCA) and help resolve disputes between consumers and credit providers. Sometimes the investigative services offered by these organisations can possibly overlap. This is why the NCR and the Credit Ombud have signed a new agreement (Memorandum of Understanding) about how to handle such matters. The NCR and Credit Ombud have agreed that instead of using vital limited resources at the NCR they will refer matters to the Ombud for disputes relating to non bank credit providers. The Ombud has agreed to a system of reporting to the NCR so that they can report and track how things are going.

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STAFF CHANGE AT CONSUMER FRIEND Consumer Friend is an award-winning service provider that many credit providers use to help them with their debt review. They are industry leaders in their field and are well respected in the industry for their fast turnaround times and eagerness to communicate and engage with Debt Counsellors. This month they ran the latest in a series of webinars. The Webinar ended with a big announcement by Mr. Justin vd Linde who has worked with the organisation for around 15 years. He announced that he will be moving on to other opportunities as of the end of April 2021. Justin received the ONE Significant Contribution to Debt Review Award in 2019 when he was recognised by his peers (both credit provider and debt counsellor) as being a positive force for good in the industry. He also mentioned that Debt Counsellors will be able to communicate with the highly experienced and familiar Chantell Rousseau at Consumer Friend in the future.

DEBT REVIEW AWARDS Each year, the results of an industry-wide, ongoing peer review process culminates in an Awards gala. The Annual Debt Review Awards is like “the Oscars” of debt review with excellence in the field being recognised at the event. Golden Piggy Bank awards are given to those individuals, practices or credit providers who receive the highest ratings by their peers throughout the year. Due to the Covid-19 pandemic, the Gala shifted online to a live YouTube event in 2020 and due to the ongoing need for precautions this year the event will once again be streamed on YouTube for all to enjoy in 2021. This year the event is scheduled to be held on the 10th of September which is a Friday. The event will begin streaming with build-up events in the midmorning once again and the main event will begin mid-afternoon and finish at the end of the workday. Debt Counsellors, Payment Distribution Agents and Credit Providers and Bureaus will all be able to invite all their staff to tune in and participate. There will be presentations, prizes, speeches and entertainment during the live stream and all (including the public) are welcome to tune in and enjoy. Links to the event will be published on the Debt Review Awards website, social media and through partners such as Debtfree Magazine.

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VBS FUNDS NOW AVAILABLE AT NEDBANK In March 2017 the SA Reserve Bank (SARB) placed the looted and collapsing VBS Mutual Bank into curatorship. In November 2018 it was ordered Liquidated as the extent of the looting became apparent. The bank had 18 3000 deposit accounts at the time and 17 750 were transferred to Nedbank (valued at R260 Million). The bank’s deposit clients included burial societies, stokvels and savings clubs. Due to the intervention of the SARB an arrangement was put in place whereby clients of the liquidated bank could withdraw up to R100 000. Anything over and above this amount will not be able to be claimed unfortunately for those few accounts where they had higher balances. Depositors have been given until 8 July 2021 to withdraw their funds from Nedbank branches. The VBS High Court case will resume in August 2021 with 18 people accused of fraud, money laundering, corruption and more.

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LEAVING DEBT REVIEW EARLY

INTRODUCTION It may sound strange but all Debt Counsellors want each of their clients to ultimately leave debt review. This is uncommon in many businesses but in debt review the end goal is to have the financially troubled consumers get out of debt. Once they are out of debt they no longer need the help of a Debt Counsellor and the debt review process. Some consumers, however, start the process and then decide they no longer want to be in debt review any more. This can happen for a variety of reasons. They might be good reasons or sadly (and perhaps more commonly) bad reasons.

LEAVING DEBT REVIEW EARLY

GOOD REASONS TO LEAVE DEBT REVIEW 1 Their financial situation has totally improved. Eg. A couple may have entered debt review when one partner lost their employment. Now, after some time, the partner has received employment again. They can now afford to (1) catch up missed payments and then (2) leave debt review and go back to paying the old monthly payment amounts and interest rates and fees

2 A person may have been placed under debt review incorrectly. Eg. Somehow, a marketing firm might have informed a Debt Counsellor (and then the NCR) that the consumer had asked to be in debt review when, in fact, they had not.

LEAVING DEBT REVIEW EARLY

BAD REASONS TO LEAVE DEBT REVIEW 1 The person wants to get deeper into debt Eg. The person has not been able to adjust their spending habits and wants to make a purchase. They try to get more credit to do so but are told they cannot because they are under debt review. They mistakenly think that by leaving debt review they will actually be able to get more credit

2 The consumer thinks it is taking a long time to pay off their debts. Eg. After taking years to get deep into debt the person grows impatient that their debt is taking long to pay off. Even though they have a plan showing them how long it will take they forget to check it and track their progress each month. They foolishly think that leaving debt review will somehow make things better.

3 The consumer gets an incorrect statement from a credit provider and decides the debt review is not working. Eg. The consumer gets a statement (or call) from one of the credit providers in the debt review who show them the incorrect figured owed because of computer or human error. Instead of asking the Debt Counsellor to resolve the issue (which takes time) they get

desperate and decide to try to suddenly leave the debt review with all their credit providers.

4. The consumer signed up for debt review with a Debt Counsellor but never made any payments or followed through with the process. When applying for more credit recently they were reminded of this. As you can see there are many reasons why someone might decide they need to leave a debt review before the planned end date in your debt restructuring court order. The best time to leave debt review, of course, is when all your debts have been 100% paid off and you are totally debt free. You may, however, be in one of the situations mentioned above and be thinking about leaving the process. Let’s consider how and when one can leave debt review and things you need to be very, very careful of, if you make this decision.

EXITING DEBT REVIEW

INTRODUCTION There seems to be a never-ending stream of ads on Facebook and other social media platforms for DEBT REVIEW CANCELLATION or DEBT REVIEW REMOVAL. While it is possible to exit early from a debt review, careful note should be taken that many of these services are scams. Read this article to get the facts on when it is actually possible for people who are under debt review to exit the program and the right way to do it.

EXITING DEBT REVIEW

THE CREDIT BUREAUS’ DEBT REVIEW FLAG When a person applies for debt review, the people who have lent them money are asked to make significant concessions to assist the person to responsibly repay their debt. Only people who are genuinely overindebted are afforded this privilege, and it is the Debt Counsellor’s job to evaluate if the person is overindebted. It is important though, that the person does not incur more debt which not only makes matters worse but would also be unfair to the credit providers who have already made sacrifices. For this reason, the DEBT REVIEW FLAG is placed on the consumer’s credit bureau profile. The Debt Counsellor lets the National Credit Regulator (NCR) know that the consumer has applied for a review and the NCR let the credit bureaus know to place a flag on their credit record. Unless existing debt is being consolidated, Credit Providers are not allowed to lend money to a person with the flag beside their name or they may be guilty of what is called reckless credit.

EXITING DEBT REVIEW

HOW TO GET THE FLAG REMOVED There are various phases in the debt review process. The method to get the flag removed depends on where in the process (which phase) the person’s debt review already is. Whether the person’s debt review is just in the information gathering phase or past the declaration phase or even after the court order phase makes a big difference. Phase 1 – Information gathering This phase usually lasts one week after the Debt Counsellor has accepted the application but must be completed within 30 days. During this time the debt review can be cancelled by simply giving the Debt Counsellor written instruction that you wish to cancel the debt review. You are liable to pay the admin fee and that is the end of it. The Debt Counsellor must update the NCR who will in turn update the bureaux and no record of the application remains on your credit history.

Phase 2 – Declaration After the first week the Debt Counsellor must make a decision if you are over indebted or not. He or she does this by issuing a document called a Form 17.2 which is sent to all of your credit providers and the credit bureaux are updated via the NCR. If the Debt Counsellor finds that you are not over indebted then that is the end of the debt review and the flag is automatically removed. If however the Debt Counsellor finds that you are over indebted, then the flag remains on your record. During this phase, the Debt Counsellor cannot remove the flag unless all of the unsecured debts have been paid off (more about this later). Until a Court Order is granted, it is possible to have the flag removed if a Magistrate’s Court looks deeply into your situation and makes a declaration that you are not over indebted. This is, of course, only possible if you suddenly (maybe you won the lotto) can afford the original instalment amounts and your accounts are not in arrears.

Phase 3 – Court Order A Debt Counsellor must take every application for debt review to either a Magistrate’s Court or the National Consumer Tribunal (NCT) to get an Order. This is a debt restructuring order. This step is important because it provides you with legal protection but also so that an independent person confirms your overindebtedness. Once a Court Order is granted the debt review is final. It is possible to apply for a recission of the Order but this is only possible if you can show the Court that the Order should not have been granted in the first place. This would mostly be due to technical issues. It is important to note that not being over-indebted anymore is not a valid reason to then rescind the Order.

EXITING DEBT REVIEW

THE CLEARANCE CERTIFICATE Obtaining a clearance certificate (otherwise known as a Form 19) is the “normal” way to exit a debt review. Your Debt Counsellor must issue you with a clearance certificate when you have paid off all of your unsecured debts and you can afford the instalments on your secured debt (such as your home loan). The Debt Counsellor must first go through a process to verify that your agreements have all been paid off and then will issue the certificate and notify the bureaux. If your Debt Counsellor cannot be reached, you can ask any Debt Counsellor to take over your case and issue the clearance certificate. If you do this, make sure that you are dealing with a registered Debt Counsellor by checking their registration here: http://www.ncr.org. za/register_of_registrants/registered_dc.php Only a registered Debt Counsellor can issue a clearance certificate. Once the clearance certificate is issued, the flag and all record of the debt review is cleared from your name by the various credit bureaux, usually within seven days. Remember though, that it may take the Debt Counsellor a little while to first verify that you have actually paid off all of the debt before they issue the certificate.

EXITING DEBT REVIEW

SUMMARY Stage of Debt Review

Method to exit

How long does it take

Before the Debt Counsellor issues the declaration of over-indebtedness (Form 17.2)

Written cancelation to Debt Counsellor

Seven days from when the Debt Counsellor processes the withdrawal

Application to Court under Section 88(b) of the National Credit Act

Varies depending on the Court Role. Anything from three weeks to four months

All of the unsecured debt is paid off and the instalments on the secured debt can be afforded

Once the Debt Counsellor has verified the information seven days from the issue of the clearance Certificate

Recission of Order

Can only be done if the original order was incorrectly granted. Between three weeks and four months

All of the unsecured debt is paid off and the instalments on the secured debt can be afforded

Once the Debt Counsellor has verified the information seven days from the issue of the clearance Certificate

After the Debt Counsellor issues the form 17.2 but before the Court or Tribunal Order

Once a Court Order is granted

Debtfree Magazine want to thank Debt Counsellor Mel De Silva of 58-Eight for his assistance with this article. To find out more about 58-Eight head over to www.58-eight.com

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“GET OUT OF DEBT REVIEW” SCAMS

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“GET OUT OF DEBT REVIEW” SCAMS

INTRODUCTION A lot of people who begin the debt counselling process have later decided that they do not wish to go ahead. This might be because they did not realize the seriousness of the process and the restrictions it brings, or are not ready to make the necessary adjustments to their lifestyle. Others might have had their details prematurely captured after consulting with someone on the phone, without fully understanding what they were committing to. They may not have received regular communication and support at the start of the process and later, as a result, decided they want out. They may not even know who informed the NCR that they wanted to start debt review. Regardless of the cause, many consumers then head online to Facebook or Google and look for ways to get out of the process. If you have spent a few minutes online searching for how to get out of debt review, you will almost immediately be exposed to all sorts of scams. If there is legitimate help out there, is it buried under a mountain of spam, scams and fraudsters.It is not uncommon for those seeking help to immediately be offered all sorts of unrealistic solutions, which all have one thing in common: eventually consumers are asked to pay upfront for the so-called service, i.e. a “no questions asked” loan for those who are blacklisted or having the debt review flag removed from the credit bureaus. Here are a few typical examples of what one may find online, taken from one Facebook group which has over 12,000 members. They range from mentions of debt review to immediate offers of fictitious loans. We have tried to leave the grammar as is:

“GET OUT OF DEBT REVIEW” SCAMS

EXAMPLE #1 Are You Blacklisted or you on Debt review • Bad Credit History? • Can’t Buy A House Or A Car? • Can’t Open A Clothing Account? • Judgments Against Your Name? • Need To Know Your Credit Score? • Let Us Help You Clear Your Name! It Only Takes 5 to 7days Get started today. inbox me your number WhatsApp me +27 73 550 xxxx So i can help you

Due to poor financial education, many people think that blacklisting actually exists. It is so bad apparently, it is compared to the terror of being ‘on Debt review’. The good news is that it only takes 5 to 7 days to be scammed out of your deposit for a fake loan.

“GET OUT OF DEBT REVIEW” SCAMS

EXAMPLE #2 Get your Instant loans at Direct Axis Finance Loan with NO CREDIT CHECK,Blacklisted,Debt Review,Debt consolidate can apply.contact us with our Email address at,directaxisfinances@aol.com or via WhatsApp or call +27832717792 landline 0875100257.

Offers of fake loans without credit checks, using the names of well known credit providers or companies are common, as most people who want to have the credit bureau flag removed, are doing so with the foolish hope of getting new credit (which they probably can’t afford). Don’t worry; this scammer will help you get deeper into debt by stealing the up-front fees they will demand.

“GET OUT OF DEBT REVIEW” SCAMS

EXAMPLE #3 For Debt Mediation WhatsApp Debt to 078xxx xxxx or inbox your numbers so that I can call and assist you. Get upto a 50% Discount on your monthly installments. Regain Financial Control. With Only One single, reduced payment leaving you with extra funds every month. Tired of the phone calls from everyone, we manage the process on your behalf so you don’t have to.There is no Upfront Fee that you are required to pay. Please Note This is not Debt Review.

This one prides itself in specifically NOT being debt review, and was posted as a comment to someone asking how to have the debt review flat at the credit bureaus removed.

“GET OUT OF DEBT REVIEW” SCAMS

EXAMPLE #4 I’m blessed to cast powerful Spells with the help of my powerful spiritual powers, my spells are done unique ways to fulfill my clients goals. If you are new or you have been disappointed by other spell casters and healers who have failed to provide you with the results they promised you and you’re stuck with no option of achieving or solving your problem, its time you contact me, the most powerful and spiritually gifted spell caster.for more information feel free to contact Dr Nkunumbi CALL OR APP ( +267) xxxxxxx.

These use my service comments, though not offering loans or some sort of debt review removal scam, are regularly posted on comments of those looking for assistance with removal of credit bureau flags. Some even offer to enlarge your genitalia, get you winning lotto numbers or bring back lost loves (regardless how they may feel about you, your genitalia or financial wealth).

“GET OUT OF DEBT REVIEW” SCAMS

EXAMPLE #5 Have you ever searched for fund, Loans, financial assistance or need an accredited lender to help you meet up with your needs and demands? do you want to buy a Car or any other Property? have your bank turned you Down? Or are they delaying your plans with too much paper work? Have you been blacklisted? Cash Loans Up To R1,000,000.00. Then you have no Alternative than to get an instant and reliable service from our loaning Agency. Cash a Personal Loans Up To R1,000,000.00 Within 24 Hours. Fast & Easy Online Application. @ 3% Interest Rates, duration of 1 to 20 Years (Maximum). No credit Reviews! for your quick and easy loan application! Blue Finance loan Promotion Team. Incorporated in the Republic of South Africa Registration Number: 1996/006595/06 NCR Registration No. NCRCP133 JSE Code: BFS ISIN: ZAE000083655 whatsapp +276274xxxxx

This scammer has given his advert extra thought, notice the attention to detail i.e. the NCR CP number listed in the post – which cannot be found on the NCR’s database, by the way. They obviously think borrowing a million rand should involve less paperwork. They probably also think they can con you into paying upfront for a bogus loan that will never materialize.

“GET OUT OF DEBT REVIEW” SCAMS

EXAMPLE #6 Here is another common scam posting on this Facebook group that gets copy pasted into almost everyone’s question or request: consolidated my debts with Amazon Loan Company, I was looking for a debt consolidation loan for the past 4 months and I have applied with my bank NedBank but I was declined and all the financial institutions I went to I was also declined too because of my poor credit. Until a total stranger introduce me to Amazon loan. At first it look like a joke, I could not believe my eyes when they offered me a loan of R250,000.00 to consolidate all my debts. That didn’t end it, I directed a friend of mine about a month after and they also help her with R400,000.00 personal loan. If you are out there looking for a legitimate lender for any type of loan. I would advise you to contact Amazon loan. No credit check!. Blacklisted are welcome. Just get your loan secure at 5% interest rate and loan funds will be transferred into your account in less than 48 hours. Email: amazonlendings04@ gmail.com please Call\Whatsapp (+27)671466XXX OR (+27)210073XXX for more info PLEASE SHARE IT. YOU MIGHT JUST BE SAVING SOMEONE OUT THERE!!!kindly tell them you were referred by Mar K Nakanjani.

This scam may catch for those who neglect to go an extra step and Google if the Amazon Loan Company is actually registered credit provider on the NCR’s database. ‘At first it may look like a joke’…but we soon realize it more look like a scam than a joke.

“GET OUT OF DEBT REVIEW” SCAMS

SAD COMMENTS It is not uncommon for a post by a consumer looking for genuine assistance to be spammed again and again by these scammers. Occasionally other concerned consumers will try to make comments, or a concerned Debt Counsellor may try to warn the original poster about the danger of scams, but these are quickly buried under a mountain of garbage, spammy posts offering fake loans and such. At the same time, it is important to recognize that many of the people who on these groups have had poor experiences with debt review and may say things like these quoted below: Comment: ‘why do u even wanna join debt review cos it’s bad’ Comment: ‘Open fraud case against counsellor: These counsellors’re robbers.’ Although you may totally disagree with these comments, those who post them have strong negative feelings about the process or their personal experience of the process. It is sad to see how frequently such comments are made and this points to a real problem.

“GET OUT OF DEBT REVIEW” SCAMS

A GROWING NATIONAL CRISIS? At present, there may be between 600 000 and perhaps 800 000 (according to one attorney’s estimation) people who are flagged as being under debt review, even though they are not actively in the process of paying off their debts. Many of them have perhaps managed to pay off their debts or got a real handle on their financial situation, while others are just stuck in the vicious credit cycle. Soon 4% of South Africa’s credit users will be stuck with a Debt Review flag while not actively in debt review. Sadly thousands of these consumers are now being scammed out of their hard earned money, while already in financial distress. This is digging them deeper into debt, robbing them of the hope of ever having an economically sound future.

“GET OUT OF DEBT REVIEW” SCAMS

WHAT CAN BE DONE? Many Debt Counsellors take the time to try to inform the relevant authorities (e.g. the NCR) and the social media platforms where these scams are being perpetrated, in an effort to protect vulnerable consumers, but unfortunately there are little visible results. These days, such scams are becoming increasingly common in all walks of life and vulnerable, gullible consumers are the hardest hit. While concerned parties can bring these matters to the attention of the authorities, it is ultimately up to consumers who have been scammed, to open fraud cases or report such things to the NCR. Where people hold themselves out to be registered with entities, like the NCR, these authorities have the power to bring charges against such individuals…if they can be found and caught. Consumer education is an effective preventative tool to help protect consumers. Warnings can be shared with those currently in debt review, but especially with those who decide to leave the debt review process prematurely. It is also vital that Debt Counsellors make a concerted effort to keep their new consumers well informed and up to date with their debt review (even on a daily basis at first). These steps will ensure that consumers end up talking to their Debt Counsellors, rather than scammers on the internet.

SEQUESTRATION IS IT AN OPTION?

I DECLARE BANKRUPTCY!

SEQUESTRATION - IS IT AN OPTION?

INTRODUCTION You may have heard of the term sequestration. You may be wondering how it works and if it might be right for you. Let’s take a closer look at the process and how it works. In America it is called declaring Bankruptcy but here in South Africa we know it as sequestration or being declared insolvent. The fancy legal term is ‘Capitus Diminutio’ and it means that the court says that your liabilities (what you owe) exceed their assets and the court has declared the debtors estate be sequestrated. This is a long standing legal process of dealing with your debts when you cannot afford to repay your creditors everything they are demanding. The idea is that a court says that you are not in a position to realistically pay off all that you owe. They then make use of your assets (the things you own) to pay off as much of the debt as possible. The court appoints someone to help with the process of selling off these assets and to make sure that the process runs smoothly. You may remember Michael Scott from the (American) Office when he declared Bankruptcy. He later learned it was a bit more complicated than that.

SEQUESTRATION - IS IT AN OPTION?

STARTING THE SEQUESTRATION PROCESS The process begins when the debtor shows themselves to be insolvent (like by writing to a credit provider saying that they do not have the means to cover their debts). The creditor then brings an application to court to have the debtor declared insolvent and to start the sequestration process. If the process is a voluntary surrender or a “friendly” sequestration the process is very similar.

SEQUESTRATION - IS IT AN OPTION?

WHAT IS A FRIENDLY SEQUESTRATION? Normally, it is an upset credit provider or credit providers who begin the sequestration process because the consumer is not paying their debts but has assets which could be sold to settle some of the debt. There is also the situation where another more friendly person begins the sequestration process (as a sort of favour to the debtor knowing that the debtor wants to sequestrate). It might be a friend who really is owed a debt. The debtor might send a letter to their friend saying they cannot pay and are actually insolvent. The friend could then begin the legal process calling for sequestration. If everything is above board and the debt owed to this person is real and the process will benefit the creditors then the courts will allow the process to begin.

SEQUESTRATION - IS IT AN OPTION?

WHAT NEXT? An advert is published in the Government Gazette and newspaper like Die Burger. An ability statement is made up and commissioned and handed in to the Master of the High Court (or local magistrate). A registered letter is sent to everyone who is owed money (the creditors) and SARS is notified (since they get first go at your money if they are owed anything). After appearing in court with an attorney, a Curator is appointed by the court to look after things. The Curator will now handle all financial matters on behalf of the debtor and make sure the sequestration runs smoothly. Assets are evaluated and the value worked out. These values are used to ensure you will cover the minimums asked by the courts. The assets are eventually sold off to settle up as much of the debt as possible. In many cases family and friends of the person declared insolvent buy some of the assets or perhaps even the person themselves buys certain things back. You may wonder where an insolvent person gets money from. Well, they may end up staying in their home while it is being sold. During the time it takes to sell off and transfer the property they might not be paying off their bond. This means they have some available funds to use for things like a deposit at a new rental or to buy some assets back. The person may also be receiving a regular salary enabling them to now use funds that were previously used to pay off debt (now included in the sequestration) each month.

SEQUESTRATION - IS IT AN OPTION?

THE BENEFIT TO THE DEBTOR Why would someone be happy to be sequestrated? Why would they even set in motion a friendly sequestration process if they will lose all their assets? The main benefit to the debtor is that once sequestrated their debts are gone. The debts belonging to the person’s sequestrated estate are now settled by the Curator and the consumer is no longer liable for them. This is a huge stress reliever. The person, who now no longer has any debts, can later be rehabilitated and if they want enter the credit market at a future time.

SEQUESTRATION - IS IT AN OPTION?

THE PROCESS MUST BENEFIT YOUR CREDITORS The main idea behind a sequestration is to get as much money back to the credit providers as is realistically possible in a short time period. This is why the courts require a minimum percentage of the debt to realistically be paid off. If there will not be enough money for the credit providers then the courts will refuse the sequestration. In some parts of the world there are different rules about this and even in South Africa there have been discussions about what is known as a “poor man’s sequestration” option. At present, however, government feels that the court summons and judgment process as well as the administration and debt review processes provide enough relief options for those who do not qualify for sequestration. These other options all help credit providers get paid back over time.

SEQUESTRATION - IS IT AN OPTION?

WHAT IF YOU DON’T HAVE ANY PAID UP ASSETS? Normally, the assets that you have are sold off to pay back the credit providers (with the credit providers who are currently giving credit for a particular asset getting their money first) but what if you do not have any assets with any value? Though this is rather uncommon, it is possible to enter sequestration and pay off a portion of the debt owed with cash. This could happen, for example, where a family member offers to provide the needed funds and they cover the required minimums which the court feels will be fair to the credit providers.

SEQUESTRATION - IS IT AN OPTION?

SEQUESTRATION & YOUR CREDIT RECORD By law once you are sequestrated you need to wait 10 years to begin using credit again. This is designed to protect credit providers from consumers abusing the process and to give consumers time to get back on their feet. After 10 years there is no need to go back to court to be declared solvent. It just sort of happens. It is, however, possible to go back to a court sooner (eg. after only 4 years) and ask the court to look at your financial situation and declare that you are no longer insolvent. This then allows you to, potentially; get access to credit once more. Here is an image of what will show on your credit bureau record when you have been sequestrated Anna-Rita Celliers of Splendi says: “A sequestration order remains on your credit profile for five years, or until a rehabilitation order is granted. The rehabilitation order will then appear on the credit profile for a further 5 years.provide the needed funds and they cover the required minimums which the court feels will be fair to the credit providers.

SEQUESTRATION - IS IT AN OPTION?

WHAT HAPPENS TO YOUR CAR DURING A SEQUESTRATION? If you have a car financed through the bank, which you still owe money on, that bank will take the car back and sell if off on auction to recover some of their money. Sometimes, if the car payments are up to date, the bank may let you keep on paying the installments each month and not take the car back. This is totally up to them. If you have a totally paid up car that is in your name (and not sold to a family member or someone else before the time) then the car will be sold off as part of your estate.

SEQUESTRATION - IS IT AN OPTION?

IS SEQUESTRATION RIGHT FOR YOU? Some consumers who are in debt distress have started the sequestration process and gone to court to be declared insolvent only to be turned down by the courts. Why? In those cases, it was because the court figured out that the consumer could rather enter debt review and pay off what they owe over a number of years. In those cases, this was because the courts also worked out that the credit providers would get all their money back instead of just a portion of the debt. This does not happen every time but the math has to be clearly to the benefit of the credit providers and the courts like to see that around a fifth (+- 20 Cents out of each Rand owed) will be paid back to the credit providers. Also, it is important to remember that the process itself costs money and you will have to pay attorneys for their services. These fees vary anywhere from R20 000 to R50 000 according to Attorney Wessel Symington of Steyn Coetzee Attorneys. This is why it is always a good idea to talk to an attorney about the process and see if they feel that it is the right option for you. In many cases qualified Debt Counsellors, who know the process, might also be able to give advice about whether sequestration would be of more benefit to you than debt review.

A special thanks to the team at Control Debt Delete for their input and assistance in creating this article. To find out more about them head over to: www.ctrldebtdelete.co.za Also thanks to Splendi for their help. If you are looking for your free credit report check them out at www.splendi.co.za

MEDITATION TRAINING COMPETITION WINNER Recently Debtfree Magazine teamed up with ADR Network SA to run a competition. The winner, Samantha Feldtman, got to attend a 5 day mediation training program as well as specialization course online. We asked her about her thoughts on the training course.

Once again congratulations on winning. So, how did the training go? It was very informative and the role playing sessions really help you incorporate your strong suits into mediation, for example I have a very conversational approach when mediating. How were the ADR Network SA trainers on your course? Cariad had a very soft and welcoming tone when she was training us and Sheena shared much of her knowledge that was truly insightful. Since the courses are done online, did you find that easy or difficult? The delivery wasn’t without its technical issues but the provision for the recordings made [after each session] is very helpful to help you stay on track. Do you think you can use the skills you learned on the course? The use of mediation can be used within our personal lives and professional business. I must say that I have already used it within my workplace to resolve employee disputes and it’s created a much more welcoming and motivational environment. Debtfree Magazine wants to thank ADR Network SA for generously providing the prize for the competition.

DEBT REVIEW LESSON #2

All Debt Counsellors get issued what is called an NCRDC number. When talking to your Debt Counsellor feel free to ask for their number.

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

DEBT REVIEW LESSON #3

On their website the NCR has a list of all registered credit bureaus, credit providers, Payment Distribution Agents, Alternative Dispute Resolution Agents and Debt Counsellors. This list helps you check if these companies really are registered.

What if...

YOUR CLIENT’S VEHICLE IS STOLEN OR WRITTEN OFF? Is he properly insured? Could the insurer repudiate the claim due to his debt review status? Since he cannot get more credit, how does he replace his vehicle?

Meliorleaf is the first and only specialist in insuring the assets of people in debt review. We genuinely protect your clients… in partnership with you.

CALL US NOW 010 141 2799 | www.meliorleaf.co.za

MAXIMISING INSURANCE RELATED INCOME

PARTNERSHIPS How does the partnership between Meliorleaf and Debt Counsellors work? We keep you advised regarding your clients to ensure they are covered properly, and remain covered. We regularly remunerate you, depending on what you choose to do: Some debt counsellors want to be actively involved in arranging and managing insurance relationships, and we equally share commissions earned. Some debt counsellors are registered Financial Services Providers who can advise their clients and provide a full brokering service, thereby being entitled to earn the full commission. Meliorleaf understands that some debt counsellors cannot, or do not want to be actively involved, but still want their clients to be properly insured: For these debt counsellors, Meliorleaf can offer a fully outsourced turnkey solution. What’s more, we will still provide you with ongoing remuneration on all active policies.

Are you interested in partnering with Meliorleaf? Call Sean or Elmarie today on 010 141 2799 CALL US NOW 010 141 2799 | www.meliorleaf.co.za

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Debt Counsellors Collective The iDDC would like to hear from members and other DCs about the struggles they face and continue to face as a consequence of the lockdown. What issues need to be escalated to the NCR?

We are lo new NEC m 2021. Would volun

ooking for members in d you like to nteer?

Due to the Covid-19 2nd wave our meetings (for the next while) will be held online. We will update all members about meeting dates shortly. www.dcasa.co.za

NDCA are ready to help consumers who are struggling with debt. Visit our site for more information ndca.org.za

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