5 Tips For Making Debt Review Payments
Tips For Making Debt Review Payments
When a consumer enters debt review, they may decide to make use of a Payment Distribution Agent (PDA) or they may decide to pay all their credit providers directly themselves.
Regardless if you use a PDA or pay directly don’t forget to ensure your Debt Counsellor’s fees are paid each month (as per your court order). You can’t skip those.
Here are some things to keep in mind when it comes to paying your credit providers during the debt review process.
1. Your Debts, Your Responsibility
The debts and agreements with credit providers are in your name so, while you are getting help from a Debt Counsellor and attorney and perhaps a PDA you have the ultimate responsibility to ensure your debts are paid.
Do not take your eye off the ball. Check that payments are made; how much was paid and how that lines up with the proposed plan or court order that you have for your debt review.
Remember: during month 1 and 2 you should expect to see professional fees going to the Debt Counsellor and Attorney (traditionally).
2. You Don’t Pay Via a Debt Counsellor
It is true that while in debt review you will pay some professional fees to your Debt Counsellor. Especially in the first month and then a tiny bit each month during the process.
Most of the time, due to T&Cs of registration, those fees have to be paid to the Debt Counsellor via a PDA (not direct into their account). Discuss this with your Debt Counsellor.
When it comes to paying your credit providers, Debt Counsellors are not permitted to accept funds for distribution to credit providers from consumers. This is prohibited as per regulation 11 of the National Credit Act (Gazette 38557 March 2015). Which says:
“A debt counsellor must not collect and distribute monies on behalf of consumers.”
If a Debt Counsellor demands that you put your monthly debt repayment into their account you should complain and report them to the National Credit Regulator (NCR). It is not allowed.
If you use a Payment Distribution Agent, there are 4 who are officially registered with the NCR, namely: CollectNet PDA, DC Partner PDA, Hyphen PDA and iPDA. Only deal with registered PDAs.
You can ask the Debt Counsellor to help you set up your debit order to pay your debt but can also do so yourself if you prefer to handle that side of things. Discuss the matter with your Debt Counsellor or PDA.
Please follow their instructions very closely when putting a payment reference as hundreds of thousands of payments get made to them each month. Simply writing “for debt review” is a bad idea. Imagine if everyone did that.
3. Don’t Miss a Payment
Even if you are in a dispute with one of your credit providers or unhappy with some aspect of service from your Debt Counsellor, please never miss a payment.
Regular monthly payments to credit providers protects a consumer from legal action. If you miss a payment, it can derail your debt review process and leave your assets exposed.
You never want to end up standing in front of a court trying to explain why they should help you set things straight if you just stopped making payments. They don’t like that.
So, never miss a payment.
4. Track Your Balances
It is good to track your balances whether you use a PDA or pay directly yourself.
If you pay directly to your credit providers yourself (make sure you have the entire cascading repayment plan of the exact rand and cents amount due every different month, to every credit provider) then keep proof of payment and confirmations and emails etc available for each payment to each credit provider in case disputes arise or you try to reconcile the balance with them (eg. once per year).
Track your progress and keep your Debt Counsellor informed. Ask them if they want you to send them copies of the proof of payments each month for their records.
If you use a PDA, they will do all of this automatically and just send you a monthly statement that tracks your payments (and estimates your balances roughly). That’s part of what you pay them for.
Note: Credit providers must provide consumers with regular statements (yes, even in debt review, as this is a contractual stipulation that must be complied with). Section 108 and 109 of the National Credit Act read with section 65 confirms this. You can make use of the NCT to force them to update you with balances if they do not. Ask Google or your Debt Counsellor how.
It is unusual for an entire debt review to proceed without one or two disputes during the years it might take. So, you will probably have to deal with a dispute at some point.
If a credit provider contacts you about a default or any other payment queries the Debt Counsellor may or may not assist you. It depends on their internal processes.
Most will assist, though not all. This is something you can ask about up front and may help you chose who to go with.
If you use a PDA then they will be able to help prove what was paid and when.
If you do not use a PDA, things may be a little tricky but hopefully you are very good at math and record keeping and can fight with the credit provider direct (if they don’t keep asking to speak to your Debt Counsellor about it instead of you).
In such a case, try to provide the credit provider with proof that you are not in arrears. You may want to inform your Debt Counsellor you are doing this.
If there is a dispute between you and the credit provider the correct process is to file a dispute in terms of section 111 of the National Credit Act with the credit provider. If the credit provider does not respond or assist in resolving the dispute you can refer the matter to the National Credit Regulator on a Form 29.
If the credit provider is not a Financial Institution it may be referred to an ADR to try resolve the dispute (there are costs involved).
If the credit provider is a Financial Institution then the matter may also be referred to the Banking Ombud: https://www.obssa.co.za/resolving-complaints/make-a-complaint/
The NCR, NCT and Banking Ombud services are offered to the public free of charge.
If, however, your Debt Counsellor offers assistance in these types of situations, they will do most of the leg work for you and will ask the PDA for supporting documentation. They will keep you in the loop but you should not have to stress.
Still, it is up to you to follow up on such matters and make sure it is being done. Don’t take you eye off the ball. Make sure it is dealt with.
Paying Off Your Debts
The goal of debt review is to make regular, realistic payments towards your debt.
Your Debt Counsellor, attorney and PDA are there to assist but remember the debt is in your name. So, keep an eye on it.
If you have issues, then it is of utmost importance to speak to your Debt Counsellor as soon as you can. Don’t wait. Acting sooner rather than later makes a big difference.
Depending on what services your Debt Counsellor offers in regard to disputes and depending whether you use a PDA or not, you should be able to sort most issues out.
Just don’t assume it will be handled and try track progress on any dispute until you have written confirmation it is dealt with.
Thanks to Debt Counsellor Renée Marais (NCRDC1780) for her help in compiling some of this article.