what you will learn in this webinar
If you want to get in touch with Anton for legal assistance, you can contact him at firstname.lastname@example.org
Justin Harrison 00:03
Okay, just give everyone a chance to get on.
David Bester 00:09
I thought I was losing my mind. Sorry Marion. Yeah, sorry about that. It seems like I had the YouTube link open in the private window and it caused some echoes on our side. So, as we ended it, we ended the entire stream. So, now we're going live again. Just give it a few more minutes and then we'll get started.
Justin Harrison 00:48
If you're just joining us, please leave your comments on the live stream. Let us know if you've got any specific questions; we'll be dealing with those today. Today's a live Q & A session, so, any questions you've got, please ask them. Please type them in the comments box. We have quite a few people seem to questions to us on the Facebook page, as well as by email. So, we'll be answering those shortly. But please, in the meantime, if you're on the live stream, let us know that you’re there, leave a comment for us. Let us know where you from, as I said, any questions that you might have? Dawie, have you sent out all the notices?
David Bester 01:34
Yes. I sent it out.
Justin Harrison 01:38
Okay. I think maybe while we're waiting, we've got quite a few people joining the stream already. Maybe, let’s introduce Anton and his background and then I'll start bringing up some of the questions for us.
David Bester 01:54
Okay, perfect. Yes, today we've got Anton Zeelie joining us. He is from Bornman Schoeman Incorporated, they’re an attorney firm here in Cape Town. And Anton agreed to sit with us on the webinar today and answer some of the legal questions. Anton is also a registered Debt Counsellor, so, he is very well equipped to answer all the debt review related questions and all the legal related questions. Anton, maybe you can just tell our viewers a little bit about yourself, while we're waiting for everyone to join us?
Anton Zeelie 02:29
Yes, thank you, Dawie. Good morning, Dawie and Justin. Yes, I am a credit law attorney. So, we specialize in the National Credit Act. We also do insolvencies; sequestrations and we do court work as well. And yes, I've also been a debt counsellor with the NCR for the last seven years; we help over-indebted consumers and ja, I've attended a lot of the NCR credit industry forums, and just keeping up to date with everything, credit law related. So, ja, that basically what we do.
David Bester 03:22
Okay, perfect. So, welcome to everyone that is online today. As you know, we experienced a few technical difficulties, but we are here now, and we are live, and we are ready to answer the questions. So, how this will work: you will see a comment section on the YouTube channel. I don't know whether you’re on your phone or on your laptop but you will see the comment section anyway. Simply type in your question, we’re going to bring it up on the screen and we will be attending to all the questions that's coming through. In the meantime, to get things started, we are going to be answering some of the questions that came up during the week. As you know, those of you on our WhatsApp profiles, we sent the survey through to you guys, asking you some of the questions you have. And a lot of questions are the same kind of question, that we kept getting. So, I've completed a document with all the stuff today that we’ll be handling today, and we'll take those through first and then we're going to be handling all the comments from the comments section. So, Anton, I think let's start with you. There's one question that keeps coming up from us a whole time and that is from people that want to know: “How do they get out of debt review?” Because when that flag is on your credit report, you're not going to get any credit. On our system, which is the data we are getting from Experian, you actually get a zero-credit score, when you are under debt review.
Anton Zeelie 04:46
Yes. What happens when a consumer applies for debt review, the credit bureau will flag the consumer, that he is under debt review and when you apply for credit, that is the first thing that they look at, as the first firewall. In other words, when you’re under debt review, they don’t even look at your affordability or your payment history, you are automatically disqualified. When you've applied for debt review, there are any two ways that you can get out of debt review. The first way is, by paying all your debt that was listed under the debt review. Once you’ve paid up all your debt, your debt counsellor must issue you a clearance certificate. So that clearance certificate you can then send out to all the credit bureaus, and that will remove the debt review flag from her name. So, you're basically starting on a new page.
In the other instance, where you haven't paid up all your debt, then you would need to bring a court application. That is the only way to get the flag removed from a credit profile, because you can cancel the debt review with your debt councillor and pay your accounts on your own but the flag will still remain there until you either bring the court application or you get the clearance certificate. How the court application works is, there are two ways of doing it: The first instance is where there was a debt review court order granted. What needs to happen then is, you need to go back to court and you need to rescind that court order; you need to have it set aside. You need to present facts to the court, that you are no longer over-indebted and that your position has improved, and that you can now pay your own debt. In the second instance, is where there is no granted court order for your debt review. In that case, you would need to bring an application to be declared not over-indebted, which works on the same principle. You have to indicate to the court that your financial position has improved and that you can pay your accounts on your own. So, in both those instances, the court will then make a determination that you're no longer overindebted and that order is then sent to the credit bureau and that will remove the debt review flag from your name. So, those are the only two ways that you can exit debt review, at this stage.
Justin Harrison 07:19
Okay, perfect. And maybe, let’s just go a step back here because I know a lot of people are quite confused by the terminology in the industry, at the moment. In South Africa, we’re still quite a modern and evolving financial landscape. So, for example, there are terminologies in the States, which people are very used to because it's been part of the financial landscape for years. What is the difference between debt administration, debt counselling and data review?
Anton Zeelie 07:52
Okay, in South Africa, debt administration is a very outdated process and it was done in accordance with the Magistrates Court Act. So, in the past, if someone was struggling to pay their debt, they would apply to go under administration. Administration is done by an attorney. So, an attorney places you under administration, and then you pay a certain instalment every month to that attorney, and that attorney then pays your creditors. Distributions are normally only every three months. The problem with administration is that the accounts still bear the same interest rates. So, the attorney doesn't negotiate lower interest rates with your credit providers. In other words, you're paying a much-reduced instalment on the account, but you’re still paying the same interest rate. That's why in the past, when people were under administration, you hear of people who were under administration for 10-years and their debt never came down; they were only paying interest off. Administration is only if you have debt less that R 50,000 and like I said, it's a very outdated process. We don't really do administrations anymore. On the other side, debt review and debt counselling are basically the same thing, which was introduced with the National Credit Act in 2007. Debt review is a process whereby a debt counsellor assesses your debt and then makes a determination, whether you're overindebted or not. The big difference with debt review and debt counselling is that the debt counsellor can negotiate lower interest rates with your credit providers, and that is then made an order of court. So, that court order finalizes your debt review with the creditors and it binds them and it protects you, legally from legal action. That way you can pay off your debts in a set time. Usually, they look at about 60-months. So, when they’re restructuring debt, they try and make the debt solve in 60-months or less. It obviously depends on what instalment you can afford?
Justin Harrison 10:19
Ja, okay. And then, I think the obvious thing that a lot of people would want to know is: “How do people actually arrive at the point where they are in debt counselling or under debt review?” Obviously, they're indebted; they can't afford to pay their debt and things start spiralling out of control. At what point or how do people normally arrive at the process of saying, I'm in debt counselling or I’m under debt review?
Anton Zeelie 10:45
Ja, normally, what people first try and do is, they try and make debt to solve a debt problem. That's the first instinct that you have, is when you run into debt problems, you look for a loan or something.
Justin Harrison 11:05
Borrow from Peter to pay Paul. Absolutely.
Anton Zeelie 11:08
That’s correct. So, that's what they try and do and then, living from credit card maxed to credit card maxed. You make an instalment on the card and then use the available balance; it's just a spiral. Usually, once people go for debt counselling, some people leave it too late. They wait until there’s legal action on their accounts, or they've been handed over to attorneys; that's when they go for debt counselling. What they should actually do is, once your living expenses, and your debt repayments are more than your income, then you are overindebted; that's when you should be going to a debt councillor but as I say, we've experienced that people often leave it too late. there is already legal action on the accounts and by that stage, debt counselling might not work. Debt counselling can prevent legal action but once there is a summons issued on the account, once it's reached that stage, the account is no longer eligible for inclusion in debt review. So, what I'm saying is, that if you're considering debt review, you should apply as soon as possible; you shouldn't leave it too late.
Justin Harrison 12:34
So, Anton, just for the viewers to understand. It is a completely voluntary process, right?
Anton Zeelie 12:41
Yes, it is a voluntary process. What you must also just understand is that, debt review is regulated by the National Credit Regulator. In other words, registered debt counsellors are compliance-monitored by the NCR. They receive regular visits by the NCR to conduct investigations, to see if everything's done right. That mustn't be confused with a new trend that we're seeing now, is you get companies who do debt mediation. That is an information process, where it's based on the same, kind of, framework as debt review, but it doesn't give you any legal protection and it's not recognized by the National Credit Regulator. It doesn't protect you from any legal action against your creditors. Basically, it's an informal process that a mediator conducts with your credit providers and he just send out a proposal and hopes they'll accept it. But none of the major banks or retailers accept debt mediation as a process because it's unregulated. Why people enter into it because if you apply for debt mediation, you're not flagged on the ITC, so you can still make more debt. So, that is the thing that they’re after there. But it's a process that's informal and that doesn't offer you any protection.
Justin Harrison 14:20
So, the two key takeaways here are: Number 1 - if you’re finding that you are overindebted and costs of repayments are more than what you're bringing in, that's the immediate time to look at debt review and above all concern, an official process like the debt interview over something like debt mediation.
Anton Zeelie 14:39
Yes, especially, once you've missed one or two payments on an account, you must really consider, that from there, it spirals very quickly, unless you are going to receive a lump sum of money somewhere or you're going to get a big increase at work somewhere; on way that your position isn't going to improve.
Justin Harrison 15:03
Which brings me to my next point and this is something that a lot of people have come to us with, in terms of their questions, and I think we can jump into the questions afterwards, Dawie but this will very broadly cover what we're seeing as a big trend. A lot of people, who are checking their credit reports with us, who are starting to monitor their financial profiles, they have a history of some sort of financial problem, right? So, it's usually not the people with the best credit scores, that are coming and looking at our system. It's usually people, who have a problem; they’re trying to resolve that problem. And many of those people have been under debt review; they've been in a formal debt review process. And many of them, have either completed that process, or they've actually managed to pay off their loans sooner, and they are, sort of, now back into a decent financial position. What is the process of getting back to normality? What is the process of having a proper profile again? What is the process of clearing your name, and actually being able to go out and access finance in the future?
Anton Zeelie 16:06
Okay, in the instance, where the person has paid up all their debt and they’ve received the clearance certificate from the debt counsellor, all that needs to happen is, that clearance certificate is sent to the credit bureau and that will remove the debt review flag. As far as getting your credit profile back on track - if you've been on debt review for a few years, you're not going to have a crystal clear credit report or a good credit score overnight. It is something that takes a while to build up. You guys specialize in credit report health, can I say? The best thing to do, once you’ve finished with your debt review, would be, the same as when you enter the credit market for the first time, is basically to open one or two small accounts, pay them every month, get your credit score up. Also, things like your cellphone account - keep that up to date. And these days, it doesn't take two years anymore, to get your credit score up; it will probably take about six months. If you have a small clothing account, and you pay it diligently every month, it should be a few months, then your credit score should be up to an acceptable level again.
Justin Harrison 17:34
Okay and before we turn to the viewers’ questions, I just want to quickly find out: if somebody wants to submit themselves for debt review and obviously, their first port of call is going to be to go to Google. They're going to look at somebody through Google; that’s usually what most people do. How can they go and verify that the person or the company that they're dealing with is, in fact, a registered entity and is regulated by the NCR?
Anton Zeelie 18:02
Okay, all the registered debt counsellors with the NCR, are listed on their website - that's www.ncr.org.za. You can go on the National Credit Regulators website and all the registered debt counsellors are listed there. You can search for one in your area. I would definitely advise you to see a debt counsellor that you can physically visit and steer clear of the call centres. I know that the National Credit Regulator has launched a big initiative to close down these call centre debt counsellors because of the way they operate, and of the complaints that they’ve registered people under debt review who didn’t actually apply; and you don’t even know who your debt counsellor is. Debt counselling is supposed to be a counselling process. You're supposed to go to your debt counsellor and sit with him around the table and work out your finances and work out the plan. It’s not supposed to be some anonymous form that you filled in from a call centre and they work out an instalment for you within 30-seconds and there you go. So, make sure that if you are looking for a debt counsellor, make sure it's someone that has physical offices that you can visit, that has an aftercare centre, that has a support centre that you can contact. This is going to be a process that you're going to be doing for a few years; it's not going to be for a month or two. So, make sure that it's a place that you're comfortable with.
Justin Harrison 19:39
Ja, it makes sense. Okay, Dawie, do you want to start tackling some of the questions that came through on the survey?
David Bester 19:46
Yes, sure. Question number 1: “I had to change my husband's phone number to mine last year. Telkom did three inquiries. Does this go against me? And Standard Bank. I had to apply for a substitution bond. They also did three or four inquiries. Does this go against my name? I saw that I had many requests last year”. I can handle that, if you guys don't mind? If you do a lot of inquiries, and you do it very often and very frequently, then it will count against you. It accounts for about 20% of your overall credit score. So yes, don't do a lot of inquiries, very frequently, because it will harm your credit score.
Justin Harrison 20:25
Dawie, we just need to let the viewers know that there is a difference between a hard inquiry and a soft inquiry. Hard inquiries are generally when you’re looking at taking out some kind of finance or opening an account and the company does a check on you. That goes on your record as a hard inquiry. Now, what lenders don't want to see; they don't want to see too many inquiries, all the time, because it is an indication that you're looking to take on a lot of debt very quickly. So, the system does have an algorithm that looks at that and factors that into your score. A soft inquiry, on the other hand, is where you check your own profile. You can check your own profile as many times as you like, and it does not impact your overall score in any way. As long as you’re keeping those hard inquiries down, it shows responsible lending, it shows responsible behaviour; that's really what they’re after.
Anton Zeelie 21:21
Ja, that's a difficult one because at the one end, when you're looking for any type of finance, you’re going to shop around, you know? So, it's a difficult one, because let's say you're buying a car, I mean, you're not going to just take the first bank finance that you get. You’re going to apply at a few banks and see where you can get the best interest rate. And all of those are listed as hard inquiries. It’s a bit of a difficult one, but I think, the credit providers also look at the type of inquiries that you do. If they see that you've done five different cash loan applications in one day, a week before payday, that looks worse than applying for car finance. So, ja.
Justin Harrison 22:12
Yes, Anton, that’s a valid point. The lenders don’t just look at your score, they actually do take a look into the actual data. They have a look at your payment history profile, they take a look at your inquiry profiles. And what every lender wants to see, is somebody who's responsible, who they can lend their money to. And that’s what we always tell consumers, to keep that in mind when you're going out. There's no problem with shopping for car finance at six or seven different places, in one month. But there's a big problem, if you’re taking out microloans, if you’re taking out bridging finance, if you’re taking out personal loans and home loans and car loans, all in a very condensed period of time. That is definitely going to affect things.
David Bester 22:53
Maybe one thing I should add there is, you can also get a soft inquiry on these kinds of loans. For instance, when you go to a website and you apply for a personal loan, the first point of action that will happen is, a soft inquiry will be done against you. Now, this soft inquiry won’t pull up your entire credit score; this will only submit a request through to the credit bureaus, asking them, will this guy be likely to be able to afford this loan - yes or no? They will say, yes or no. If yes, then they will contact you to submit the full application, at which point, your full credit report will then be looked at and at that point, it’s a hard inquiry. But if you only give, for instance, your name and your email address, and I strongly advise you to look at the terms and conditions, then most cases, it's only a soft inquiry at that stage. And it won't be a hard inquiry, which actually shows up on your credit report.
Justin Harrison 23:46
David Bester 23:48
So, the next one is a pretty long one: “2018 I was unable to make the required payment for my credit card. Standard Bank required me to send ID copy, payslip and an affidavit, explaining my situation. It was agreed that I will pay R500 for the next six months then they will review my account thereafter. Just before the end of 2018, I discovered that the bank has listed me, without any communication, while paying the R500. At the beginning of 2019, I started getting calls from MDB Collection, on behalf of Standard Bank. At some point, they even threatened me, about legal implications, such as taking me to court and blacklisting me and they even sent me a demanding letter. I told them, I have no money; I'll pay the credit card when I have money and the bank has already defaulted. They are still phoning me. My complaint is, Standard Bank listed me, after I made the arrangement with him and started paying the agreed amount. Is that legal, Anton?”
Anton Zeelie 24:46
Yes, unfortunately, it is legal. It is very unethical. But unfortunately, there is nothing that prevents them from doing it. Once you default on an account, they will list you as a slow payer with ITC – that was also in the question - even though, you've got a payment arrangement in place with the bank. Let's say, your normal instalment is R2,000 per month, and now you're paying R500 for six months, they've now made an arrangement with you, that will still be recorded on your payment history on your credit report; it will still be recorded that you are a slow payer, because you've been making short payments. As with the handing over of the account to MBD Attorneys, that is very unethical. Like the question says, there was an arrangement in place [inaudible] then you would assume, that the bank wouldn’t hand you over - which means legal fees, and all of that. I know that you can take this up with a banking ombudsman; there have been several complaints in that regard. If the person can prove that they’ve got all the documentation, or she’s got proof that the bank told her that the arrangement is in order and as long as she sticks to that R500, they won’t proceed with legal action. I'm sure that she can lay a complaint at the banking ombudsman. Like I say, the moment that you default, they can hand you over to attorneys for collection but it's very unethical for them to let you understand that there's an arrangement in place, and then you keep to your end of the bargain and then they go and hand you overdoing it, which means more legal fees for your account [inaudible]
Justin Harrison 26:49
There’s a couple of key things that also need to be looked at. First of all, we often say this, what is ethical and what is legally correct, it's not always the same thing. So, first of all, when you get in these situations, make sure you keep copies of all documentation, because one thing in South Africa that is pretty strong is, that we always have a lot of agencies sitting between companies and consumers. And two of the key agencies, in this instance, that should be employed, if the person does have documentation and can prove everything she says. First call, should be to the ombudsman, the banking ombudsman; the second call should be to NCR. The National Credit Regulator has also got some scope to intervene there. And between those two bodies, it should be - if that person is persistent enough - they should be able to get some kind of mediation going, and possibly resolve the situation. But the big point I want to make and I'm really glad that this question has come up. We talk about debt mediation; we talk about these third parties who are coming in and not doing anything officially and sort of, skimming profits off the top of people's loans. My suggestion is always, when you get into a situation like that, first of all, document everything. Secondly, if you can, and unfortunately, not everybody is in a position to do this. But if you can, try and go through a proper legal process, at least get some kind of document drawn up through attorneys that state, these are going to be your repayment terms, etc, etc. Because it gives you some kind of fall back.
Anton Zeelie 28:27
That specific person, who asked the question, is more than welcome to send me an email and I can maybe send an email to NCR, just to see because it is very unethical and I'm sure that the NCR will intervene there and instruct Standard Bank to withdraw that account from the attorneys - that can happen. What happens is, you speak to someone in a call centre at Standard Bank and then the consultant that you deal with, makes this arrangement with you but then the account pops up in their collections department, as being in arrears. From there, everything is automatic. The next thing you see, you get a call from MBD. Like I say, the person who asked the question, is more than welcome to send me an email, with the details of that Standard Bank credit card and then I can maybe follow it up for them.
David Bester 29:28
Ja, it looks like she’s actually joined us on the live feed here. She said, “Thank you, I'm going to follow your advice”. Looks like it's the same person. Okay, so the next one is: “Why do credit bureaus give different reports?” Shall I answer that; anyone else want to take it?
Justin Harrison 29:47
I’ll take it. First of all, all of the credit bureaus share the same data. All of the data gets aggregated from a central place, known as SACRRA and we all have to exchange data between the various credit bureaus. So, first of all, the base data is pretty much the same - it might take a little bit longer to update on one system versus the other - but fundamentally, everybody's pretty much got the same data. The way that data is looked at, the way the scoring is worked is unique, between the credit bureaus; not all of them follow the same patterns and rules. So, fundamentally, your data is the same; your scores may vary. But essentially, whether you go to one bureau or the other, you're pretty much going to get the same data.
David Bester 30:33
Yes, the score might change but that's just because every credit bureau has a different algorithm. However, it doesn't matter which is credit bureau it is, you will fall into different risk classes. And that is the main thing to look at, because the risk class that you fall into, determines if you're going to be able to apply for a loan or not. So, the next one: “What do I do, when a creditor does not update with ITC; it's been 60-months now, with no updates?”
Justin Harrison 31:02
Anton, maybe you can take that one?
Anton Zeelie 31:05
Okay, you will have to lodge a dispute with the credit bureau. I know with TransUnion and Compuscan, which are two of the major credit bureaus, their dispute process is really simple. You can just go on TransUnion’s website or Compuscan’s website, you’ll find an email address there, where you can lodge a dispute. What you do is - I assume, that it's an account, that was paid up - and you’re still listed or something like that? So, then you just send your paid-up letter to dispute@compuscan or whatever their email address is, and they will then sort it out. They will contact the bank and tell them hey, what's going on. We need to update this person’s info. So, the best would be to just lodge a dispute with the credit bureau, because it seems like you haven't gotten anywhere with a bank. It’s a waste of time.
Justin Harrison 32:11
Ja, we always advise them. We have got previous webinars on it. Dawie, perhaps we can send those links to that person, where we discussed the dispute generation process. But it's pretty simple. Number 1: documents - make sure you've got proof of everything that you’re saying; only log one dispute at a time, it keeps things simpler; and make sure you keep references of everything, keep yourself pretty organized. We've got a very extensive webinar on your dispute logging process. Also, if you are a My Credit Status subscriber, we have a dispute generator within the membership area. Right there, where your credit report and credit profile is, you can actually log disputes directly from there; we make the process really, really simple. One thing that people need to understand is, logging a dispute is a very manual process and it does take time and there’s no automatic system on the other end. So, you have to be patient and you have to be persistent.
Anton Zeelie 33:04
Yes, I know that most of the turnaround times are about 21 days, working days. So, you have to be patient, it's not something that happens overnight.
David Bester 33:16
Ja, legally, the bureaus have to get back to you within 20 days. So, if it's not 20 days, then you can go to the NCR and lodge a complaint with them. Okay, so the next one: “I was sequestrated in 2013 and rehabilitated in 2019. However, my credit report reflects I owe some of the creditors money and I was placed under debt review. Those creditors formed part of the sequestration. I've contacted the creditors and all the major credit bureaus, but in vain. What can I do to improve my score and profile reflects the correct information? Thank you.”
Anton Zeelie 33:50
Okay, so, the first step will be, since you've been rehabilitated, I'm not sure if you still have contact with attorneys that did initial sequestration, but the first step would be to contact them and find out what's going on because it could be that, again, the credit bureau hasn't been updated yet; that your profile has been updated yet. Because when a sequestration process is concluded, all the debt is settled and those creditors doesn't have any claim against you, for any of the monies that they didn’t receive. That can't be, that there’s still outstanding balances. It could be that the credit bureau just hasn’t been updated. As far as being listed under debt interview, I assume that you haven't applied for debt review, but you are now somehow listed? Again, as I said earlier, you get these call centre debt counselling companies, who phone people up and get their name and ID number and then, just list them under debt review. And so, in that instance, you would have to find out from the NCR, who is the debt counsellor that listed you under debt review and follow up with them. If they don't give you a satisfactory answer, again, lodge a formal complaint against that debt counsellor at the NCR. But as far as your sequestration is concerned, those accounts that were settled, during the sequestration process, there is no way that they can have any balances or any claim against you. The sequestration is a High Court Order and once that final order is made, all the creditors that were part of the process, basically, they get their pay-out and the rest is written off. There is no way that they can have any future claim against you.
Justin Harrison 35:55
Ja. There’s two important things and we see this coming through a lot of the time from people. People say to us, “I've been listed under debt review and I've never undergone the process of debt review”. And usually when we ask them, “Have you spoken to call centre? Have you ever spoken to anyone over the phone?” They say, “Yes, I did, but I didn't officially take up their process”. [inaudible] So, if you find yourself in this situation, go to the NCR, say, listen, this is your situation, you want this investigated and make sure that you follow through on it. Because it's unethical, it's not allowed. And unless you have expressly requested to be under review, and given your consent, nobody can place you under review. I think the second point, I want to make and this is really important. A lot of people always talk about these debts that have been paid up and years later, it’s still biting them in the backside. First of all, keep documented proof of everything. I keep saying this: document, document, document everything. Secondly, when you finish paying something up, try and get paid-up letters. It's really important to try and get these letters that say listen, your account is paid up; it's been settled. Because exactly, like Anton said, once you have settled your debt in accordance with a court order, in accordance with an agreement that's been made, you don't have any further liability, in terms of that debt. So, it is really important to make sure you keep your agreements, make sure that you keep your paid-up letters, and make sure that you check your credit profile, that these things aren’t creeping in. Because there's a lot of human error in this and, as Anton was saying earlier, sometimes things land up in a collection division in the company, and by some mistaken, the incorrect data being loaded, somewhere you're on the system. So, it's really, really important. Check your profile, make sure you have document proof of everything and dispute, dispute, dispute.
Anton Zeelie 37:51
Ja, I know that the NCR are cracking down on these call centres a lot now. So, if you've experienced that, definitely, forward it to them. They will then take it up with that debt counsellor and ask them, where’s the competed forms, where the client signed and applied. They’re really cracking down on those operations.
David Bester 38:18
Yes, you actually answered one of the questions that was coming up as well. A person wanting to know, why he’s listed under debt review and he doesn't even know that he's listed under debt review. So, I think you've covered that now.
Justin Harrison 38:29
Dawie, can I just put one question up on screen before we move on because I think this is a really good question?
David Bester 38:35
I think it's piling up here. So, I think, let's handle some of the live comments and then we can always go back to some of the comments that we’ve got.
Justin Harrison 38:44
Perfect. So, Brenda says: “I'm not happy with my current debt review company and would prefer to personally make payment arrangements with my creditors.” What are Brenda’s options, in this case, Anton?
Anton Zeelie 38:55
Okay, nothing prevents you from paying your own debt. What happens usually is, like I said in the beginning when you apply for debt review, the payment arrangements that were made, is made in order of court. So, usually what happens is, the consumer would pay their monthly instalment to the PDA - the payment distribution agency - and that PDA will then pay your credit providers, the agreed amount for each credit provider. So, nothing prevents you from not paying it through the PDA. What you can do is, you can cancel your debt review with your debt counsellor and then, you can pay those amounts that they were paying each credit provider, you can pay that directly to each credit provider. It will be beneficial in two ways. Firstly, you will have more money going towards your accounts because remember, if you pay them directly, you will save on debt counsellor aftercare fees, and also the PDA fees. You will see on your monthly statement, if you're paying R5,000 a month to your debt counsellor or to your PDA, let's say, R4,600 of that will actually go towards your debt because the other R400 goes towards the DC aftercare fees and the PDA fees, each month. If you pay your creditors directly, you can actually pay the full R5,000 towards your debt. That means, it will come down quicker. Remember, you will still be listed under debt review, even though you’re paying it yourself, you're paying your creditors directly. As long as you pay those amounts, then they can’t terminate from the debt review process. If you default on that, the creditor can withdraw from the process and then you will have to pay the full contractual instalments again. I'm assuming, what this person wants to do is, they want to pay the amounts that was agreed upon in the debt review; they want to continue paying those amounts, not the original instalments. So, you can do that, like I said, now, but you will still be listed under debt review unless, as I said in the beginning, unless you bring a court application, to be declared not overindebted. But then, you will lose all the advantages of debt review, in any case. You understand? Let’s say, remember, while you're under debt review, you’re most probably paying a reduced interest rate on the accounts or that's what it's supposed to be - your debt counsellor is supposed to negotiate a lower interest rate on each account. Once you bring that court application, to have the debt review set aside, then those agreements will no longer be in place. You will go back to the full contractual instalment and interest rate. But yes, absolutely, to answer the question just very shortly, if you're not happy with your debt counsellor, you can either move to a different debt counsellor – you can be transferred, you won’t pay any fees at the new debt counsellor, you will just carry on. They can't charge you fees again. Otherwise, if you want to pay it yourself, you can do that as well, but then, you must just remember, you have to pay the exact amounts that were negotiated by your debt counsellor. So, let's say, you've got five different accounts and the one is supposed to get 250 and the one is supposed to get 500, then you must pay those amounts, to each creditor, every month. You mustn’t default on that because if you default on that, the whole arrangement basically falls apart, you know?
Justin Harrison 42:47
Ja. Okay, this is also a good question and I think it ties back into something that we've already answered but maybe just to reiterate that, Anton. This person says: “I've got an issue with NFC who have come back after I received a clearance certificate and says I owe interest”. How does a suggestion like that get handled? So, I’m assuming they’ve paid their loan and the company’s come back and said there’s interest still owed.
Anton Zeelie 43:14
Okay, I think this is “MFC vehicle finance” that they’re referring to? And after I’ve received a clearance certificate, so, that means that MFC has already sent the paid-up letter because the debt counsellor can only issue a clearance certificate once they have paid-up letter from each credit provider. The best step here, would be to get that paid-up letter from your debt counsellor because he says that the clearance certificate has been issued already. So, the debt counsellor must be in possession of a paid-up letter from MFC. That paid-up letter, you then send to MFC and query it and say “But listen, here's your paid-up letter. A full and final settlement of the account has occurred and there’s no further claims”. This could again be a system error and I'm sure if you send the paid-up letter, from MFC – their own paid-up letter - if you send that to them, they should be able to clear it up.
Justin Harrison 44:24
Okay. And then, we’ve got another comment here, more than an actual question. Maybe you can just touch on this, Anton. The person is saying: “I contacted News24 to inquire about debt review. In the process, I discovered that they were not trustworthy, they never disclose costs involved and the conditions. I ended up withdrawing my application.” So, rather than focusing on an individual company, in terms of somebody going for debt review, how transparent are the costs? When somebody enters into that process, are they absolutely aware of what the costs are going to be to them?
Anton Zeelie 45:01
Okay, yes. In terms of the debt counselling guidelines and code of conduct, the debt counsellor has to, before, lay out all the costs and fees that are involved with debt counselling. If they don't do that, what is supposed to happen is, either form 16, which is the form that you use, when you apply for debt counselling, all the fees must be listed there. That includes the once-off restructuring fee, that you pay the beginning, that comes off your first instalment; the legal fee, which comes off your second instalment, which covers the attorney that goes to court, to make your debt review and order of court. And then, after that, there’s an aftercare fee, which is, I think, about 3% of your instalment that the debt counsellor is entitled to. But all those fees, are in the NCR guidelines and they're supposed to be in your application form and you have to sign next to them. I know of cases, where consumers have complained to the NCR that the debt counsellor wasn't transparent in their fees, where the debt counsellor had to refund the consumer, certain fees that they didn't disclose upfront. It's very important that the debt counsellor has to disclose all fees. And as debt counsellors, we are very clear on what the fees are; they are in the application form. The debt counsellor must go through all the different fees with the consumer and have them sign on that same page, so that there can be no confusion about what the fees are.
David Bester 46:50
Ja, I know in the past there was a lot of ‘fly-by-night’ okes that came through as debt counsellors; like every second person was a debt counsellor and until the NCR came along, it was pretty wild out there. So, I think this person maybe experienced some issue back then but like you said, there's a lot of regulations involved now, and you can't just do what you want anymore.
Justin Harrison 47:13
Ja, I think the NCR helped out a lot.
Anton Zeelie 47:17
Ja, I must say that the NCR has succeeded in closing down a lot of debt counsellors, over the last few years and a lot of the bad apples have been removed from the basket. All those ‘fly-by-night’ debt counsellors who worked from their garage at home and they don't have any infrastructure or aftercare systems. So, basically, the consumer applies and then after that, he’s on his own. That's why it's really important, to read online reviews or contact the NCR. They will advise you to a reputable debt counsellor in your area, that you can visit and can sit down with and go through everything. Mostly where these fee disputes come in is, also where it was a call centre. The call centre just signed up the person but they didn't really go through all the terms and conditions fees and all of that.
Justin Harrison 48:19
Ja, that makes sense. Before we go onto any other questions, we’ve only got a few left. Anton, I just want to ask you two questions that I see come out a hell of a lot, as well. The first is with regards to, once you've got a debt review flag on your profile. “Is there an automatic period, once you have been rehabilitated, where, automatically, that flag will fall off your profile, or is it a process that you have to manually engage with to go and have that flag removed?”
Anton Zeelie 48:49
Okay, there's two different scenarios. The first is, where all your debt is paid-up, and you have a clearance certificate. Then, there is nothing much that you have to do. You don’t have to go back to court, you don’t have to do anything. You only take that clearance certificate, you have it commissioned by a Commissioner of Oaths and then you send that to all the different credit bureaus - to TransUnion, to Compuscan, to Experian, all the different credit bureaus. They have to then, within 20 days take that debt review flag off your name. [inaudible]
Justin Harrison 49:26
Am I correct in saying that the consumer has to manually go and do that? It's not going to automatically come off their account at some point.
Anton Zeelie 49:34
100% correct. Yes, you have to do that. You have to physically send that clearance certificate to the credit bureaus. It won’t, once you’ve paid your last instalment, it won’t happen automatically. It's just a little admin that you have to do, you just have to send that one-page document to three or four email addresses and that’s it. Then there’s no way that they can still list you.
David Bester 50:00
Let's assume, they got that clearance certificate now but they don't go to the credit bureau, and update it. Am I right in saying that after five years, automatically it will fall off?
Anton Zeelie 50:10
No because it's not a judgment. If you have a judgment against you, for any civil debt, after five years, that will disappear from your credit profile; it won’t be reflected on your credit profile anymore. But remember, if you have a judgment against you, the creditor can still enforce that judgment for 30 years. So, if a bank got a judgment against you, in 2010, for a credit card, that debt will only prescribe in 30-years, in 2040. It’s still enforceable for 30 years, although it's only on your credit profile for five years. But ja, your debt review flag will never just go away on its own. You have to send that credit report in, otherwise the credit bureau won’t know. There’s no way that they will know that your debt counselling process has been completed. They don’t monitor that.
Justin Harrison 51:16
In fact, I personally believe that the NCR should make it a regulation, that once a consumer’s completed that, it should actually be the debt counsellor’s responsibility to automatically notify, as part of the process, the bureaus because let's face it, a lot of consumers aren't aware of this, right?
Anton Zeelie 51:42
Yes, absolutely. At the debt counselling company that I'm involved with, that's what we do. Once the clearance certificate is issued, it's a one-minute job, you just send that document to all the credit bureaus and you CC the client in, so he's got it for his records and that's the end of the process. But I know [inaudible]
Justin Harrison 52:09
My next question, which is, you were talking about prescribed debt and I wanted to touch on this because this is something that comes up all the time. First of all, people want to really understand what a prescribed debt is, they want to understand the period in which it falls and people have, kind of, taken the stance... We've seen amongst consumers [inaudible] Pretty much, a debt is prescribed and then it’s forgotten about. That’s what a lot of people believe in the market. As the last big question [inaudible] prescribed debt and also the [inaudible] in terms of the prescribed debt.
Anton Zeelie 52:54
Okay, you just broke up a bit there but I think I got the question. In terms of the Prescription Act, how prescription works is that once the debt has become due, this is when prescription starts running. In other words, once you've defaulted on an account, that is the moment that prescription starts running. Not when you open the account, or when you took out the loan or when the debt started. It's once you default on an account, that is when prescription starts running. Once you make a payment on the account again, then it interrupts prescription. In other words, if you skip this month, prescription will start running but if you make a payment on the account in six months’ time, it will interrupt the prescription and if you default again, the three years will start from scratch again. The prescription period is three years, if you have been in default on an account for a period of three years, and the credit provider hasn't taken any legal action in those three years, then the debt is prescribed. Legal action meaning, they have to have issued summons. Legal action doesn't mean a letter or call, or anything like that. A lot of people falsely believing that… Sorry? No, it doesn't count. You have to issue summons, in that three-year period. If you don’t, then the account is prescribed. A lot of people believe that if the credit providers sent you an SMS or they sent you a letter or a call, then it interrupts prescription. It doesn’t. In other words, if they haven't issued a summons in the three years since your last payment, then the account is prescribed, then they can no longer proceed with legal action. They can proceed with legal action, they can issue a summons after three years, but then you will just raise a defence of prescription. You will follow a notice of intention to defend at court and you will say your defence is prescription. So, that's how it works.
David Bester 55:23
Justin Harrison 55:25
Dawie, that's pretty much all we’ve got time for [inaudible]
David Bester 55:35
We were interrupting each other there. Can you guys hear me? I think Justin's having some difficulties with his line speed over there. There was one thing I wanted to raise as well. I think Justin's off now. “How long do closed accounts stay on my profile?” Anton, that’s about two years, right?
Anton Zeelie 55:58
Yes, it's about two years. Usually, your payment history is reflected for 24-months for two years. It will be it more or less two years that a closed account will be there but that shouldn't be any problem. It shouldn't affect your credit score. I can’t imagine that, that will be a major issue.
David Bester 56:26
Ja look, if you've got a good history and everything was paid up and everything was on time, then it will actually count to your benefit. I think that's all the questions we can handle for today; we've run close to an hour now. If anyone has any questions for Anton, anyone wants to get rid of their debt review or need some legal action, Anton’s email address is on the screen, as you can see. You can just drop him a message and Anton can get back to you directly. Other than that, we will send a replay to everyone that couldn't make it. And for everyone that wants to reference back to Anton’s questions and answers. And then we'll see you guys again, in two weeks. [inaudible]
Anton Zeelie 57:13
Dawie, just a last thing. I don't know if we’ve still got a minute?
David Bester 57:17
Sure, go ahead.
Anton Zeelie 57:18
Okay, there's just one last thing I want to mention quickly. In the instance - I get this question a lot - in the instance, where a person is under debt review but they can no longer afford the debt review instalment, especially now, during the COVID-19 pandemic, where a lot of people are in a situation, where they've been retrenched or they've lost one of the household incomes. So, they were under debt review and they were paying it every month, but now they're in a position where they can't even pay the debt review anymore. So, what now? Okay, so that's a question that we get a lot. What happens then is, the next step would be, to apply for a voluntary sequestration. It sounds very hectic; it sounds like a very harsh procedure. But like the person in the previous question said as well, they were sequestrated in 2013, and they were rehabilitated in 2019. Within six years they were rehabilitated. We've had cases where people have been rehabilitated in two or three years. What happens during a voluntary sequestration, is that you apply and then all your debt is settled with one of your assets. So, if you've got a car, or you've got a lump sum of money or something, then all your debt is settled and each creditor gets like 25 cents in a Rand. That happens when your liabilities are more than your assets, then you can apply for voluntary sequestration. And then, you basically start on a clean slate, where you are unable to make debt for a year or two but at least you’ll walk away from all your debts. That is also an option, if debt review doesn't work, or is no longer viable for you. That's another option to...
David Bester 59:16
A lot of options you've got.
Anton Zeelie 59:18
Yes. We've done a few successful applications like that. And basically, you get rid of all your debt, you might lose your car, if you've got a lot of debt. They might sell your house but at least, then you can go and rent for a few years, until you're in a position to buy a house again. Because if your house is in arrears and it gets sold on auction by the bank, you're going to really, financially, take a big knock. In that case, it would be better, if you can't pay it anymore, it would be better to apply for voluntary sequestration and get rid of all your debt in one go.
David Bester 60:01
That makes sense. Well, thank you very much for joining us, Anton. We really appreciate your time.
Anton Zeelie 60:08
Alright. Okay Dawie, thanks for having me. Goodbye.
David Bester 60:15
[60:25 AUDIO ENDS]