ABSA No Longer Plan To Charge R1.4 Mil For a R50 000 Debt
When Mr Van Zyl (a 58 year old Electrician) entered debt review in 2010, one of his debts was to ABSA. Mr Van Zyl had borrowed R50 000 from ABSA and had agreed to repay R1550 a month for 60 months (which adds up to around R93 000). In fact, he paid back around R15 000 before he ran into an unplanned difficulty. After 10 month’s, Mr Van Zyl lost his job and grew concerned that he might lose his house since he could not afford to cover his monthly costs and debt obligations. It was then that he decided to enter Debt Review to make sure he could honour his debt commitments.
Entering Debt Review
10 month’s after taking the loan, Mr Van Zyl lost his job. He grew concerned that he might lose his house (which he has a bond on) since he could not afford to cover both his monthly costs and debt obligations. It was then that he decided to enter Debt Review to make sure he could honour his debt commitments as best as possible. A plan was suggested by the Debt Counsellor in line with what they could afford at the time.
2010 was a bit of a wild time for debt review and there were many challenges at the time for both ABSA and Debt Counsellors. Back then many credit providers were slow to provide information, kept changing contact details, were not fond of the process and communication between Debt Counsellors and credit providers was not as good as it is today.
The National Credit Act at the time (and still) did not make allowance for changing of the interest rates without consent. Due to the small repayment amount proposed ABSA (through their representatives at the time) were not happy with the proposal they received from the Debt Counsellor. Interestingly, when that same proposal was put before a court ABSA didn’t realise they had received notice of the court action and so never showed up to oppose the application. Thus the court made an order which was over a really long time period, at a small monthly amount.
‘the court made an order which was over a really long time period, at a small monthly amount’
The order was over a long time period since the proposal focused on making sure the consumers bond was paid each month. Admittedly a bond repayment is very important and the consumer’s focus was on keeping his house safe. And so the matter seemed to be resolved, legally speaking. The court order was sent to ABSA and captured on their computer system.
ABSA report that the proposal they had received and was ordered by court was for the debt to be repaid at around R400 over 25 years (most debt repayment plans are now made over 60 months). Because no changes had been agreed to in regard to interest rates this means that the debt would continue to grow as the R400 did not cover the monthly interest amount.
New Challenges and a Change of Debt Counsellor
However, as the months went by new problems were on their way. Though Mr Van Zyl got work at a new mine and this helped greatly sadly at the same time, Mr Van Zyl’s first Debt Counsellor gradually became uncontactable and was not offering the family the assistance they needed. Mr Van Zyl then had to turn to a second Debt Counsellor who kindly offered to assist him to try sort things out. All Debt Counsellors know that taking over a case from another Debt Counsellor is very tricky and at the time the process was a slow and painful one.
‘taking over a case from another Debt Counsellor is very tricky and at the time the process was a slow and painful one’
In 2012 Debt Counsellor Bernidene Thieroff took on the Van Zyl’s case and looked to help. She arranged for Mr van Zyl to begin paying more toward his debt each month and helped sort out several of the smaller debts eventually leaving only the bond and loan account.
5 years to Adjust NCR Debt Help
It took the NCR from 2012 till 2017 (5 years) to make the necessary adjustments on their register of consumers (called NCR Debt Help) to move the consumer over to the new Debt Counsellor. The request was made in 2012 and every 3 months the Debt Counsellor sent statistics to the NCR about these (and other) consumers.
Presently Debt Counsellor Bernidene Thieroff is trying to work with ABSA to sort out the remainder of the consumer’s debt. ABSA has offered to pay for the original court order from 7 years ago to be amended. Normally, most debt reviews would be finished by now and both parties are looking to get the consumer out of debt faster. ABSA have offered to cut all interest from the consumer’s accounts as the commonly do with debt review plans these days (see how much better things are these days).
If the situation continues as per the bank’s calculations on the original repayment plan (based on the first Debt Counsellor and Court’s plan) the bank works out that the consumer would perhaps pay as much as R1.4 million on a R50 000 loan. This is, of course, just ridiculous. A consumer should never face such crazy interest and account fee shenanigans. Fortunately, ABSA Debt Review are now currently investigating the matter further with the help of the new Debt Counsellor.
In an effort to help ABSA have thus far, offered to cut all future interest from the consumer’s account as the commonly do with unsecured credit accounts in debt review plans these days (see how much better things are nowadays). This would mean that the consumer will still have to pay around R1500 a month for around 3 more years. This would mean the family will eventually spend ten years in debt review when most consumers are only under review for 5 years these days.
Debt Review So Much Better These Days
One can immediately see how quick ABSA are these days to help consumers by dropping all interest fees and charges on the account. Even their dropping just the R60 monthly account fee makes a huge difference or R720 a year. These concessions are common these days where credit providers make huge concessions to help settle consumers accounts as fast as possible and help them get back on their feet.
Whereas back in 2010 a plan over 25 years might have seemed to be ok, these days few plans will go longer than 60 months. Debt Review has come a long way.
The InDuplum Question
Mr Van Zyl has already paid ABSA around R100 000 on his debt so far , which is what he originally thought he would pay, bringing it close to what is known as the induplum limit. This is a legal limit placed on debts that fall into default. It limits allows for a consumer to only ever pay back twice what was owed when the default happened. If the consumer never misses a payment then the account is not in default. If a payment is missed then a default has happened. ABSA presently seem to feel that no default happened and thus the limit woudl not apply.
‘This is a legal limit placed on debts that fall into default’
ABSA may feel this way since they may reckon that the debt review court order replaces the original agreement and arrangement and obligations but this is not a common position among credit providers. Most credit providers insist that the original contract with the consumer stays in force underneath the debt review arrangement. It is unlikely that ABSA feel differently. Normally when consumers enter Debt review then on month one or two a default happens on the consumer’s accounts due to fees paid to the Debt Counsellor or the attorneys. This may then mean that an induplum limit has been put in place. As the Debt Counsellor and ABSA investigate further this will be clarified.
‘they have honoured their debt obligations as best they could and for many years have been able to cover their monthly needs ‘
The van Zyl family have been paying debt for a long time and have some way to go on their bond and perhaps this loan account. What is true is that they have honoured their debt obligations as best they could and for many years have been able to cover their monthly needs such as educating their child and putting food on the table.
With the help of their new Debt Counsellor, their situation has been further improved and their credit providers are actively working to sort out their situation as fairly as they can, given the history of the account. Debt Review has really helped this family over many years. The family took a bond and were happy to pay back debt over many years. The question now is how much they will still pay and how much longer they will need to remain in debt review.
If you are having financial difficulty then please find a reputable and experienced Debt Counsellor who will assist you to get your debt under control and will fight for your rights were needed. Check the back of each issue of Debtfree magazine for contact info of Debt Counsellors accross South Africa.