A Comment from the NDCA [Regarding Transfers]

Debtfree Magazine approached the National Debt Counsellors Association which represents many National Debt Counsellor practices to ask them about this troubling trend.

Here is what they told us:

‘At the NDCA, recently our members have seen a substantial increase of requests which we call “bypass transfer” requests.

A transfer request is a legitimate request sent by a reputable company on behalf of a consumer, which results in an issuance of form 17.7 to formalise the transfer of a consumer from one Debt Counsellor to another.

At NDCA, we are not against legitimate transfer requests.

A “bypass transfer” request is one invented by disreputable companies to circumvent existing processes as their transfer requests could not be validated by reputable practices such as our members.

These “bypass transfer” requests are thinly disguised transfer requests where disreputable compan(ies) promise consumers unrealistic outcomes (“we will reduce your debt review payments by half” or ” we will get you removed from debt review”) for a fee in the range of R6,000 to R10,000. In return consumers are asked to request a form 17.w from their current Debt Counsellor via using standard email templates provided by the disreputable companies. 

The consumer requests are all identical, and it is clear the text is provided by the disreputable company(ies) whom they approached (we know so because in a few unfortunate cases consumers copied the entity who gave them the advice and provided the text). In such a request, consumer says they know what a form 17.w entails and they plan to pay their debt on their own directly to credit providers even if they have a court order in place.

A few weeks (or even days) after 17.w is issued, then the disreputable company requests a transfer form 17.7 from the original Debt Counsellor. 

Their thinking is that, while the original Debt Counsellor may decline a direct transfer request from them (as they are known to be disreputable) on behalf of a paying client, the original debt counsellor is more likely to accept the transfer of a non-paying client.

Ultimately, we believe these companies are meeting a demand in the marketplace created by the shortcoming of the NCA and regulations: the desire or need to borrow money (i.e. get debt review flag removed from credit bureau profile) while in debt counselling – because simply put, life happens – has never been adequately addressed by the completion/exit clauses in the NCA or its regulations.

Unfortunately, our members have seen numerous examples of clients who are subsequently “duped” where the unrealistic promises are not met, and they come back a few months later asking for reinstatement of our members’ services. Sadly, that consumer’s debt repayment arrangements become much more difficult – if not impossible – to revive within debt counselling and as a result the consumer is in a worse off situation than before.

Companies who offer this “service” often advertise “debt review removal” on their websites and Google. They also cold-call consumers as it appears they have access to up-to-date and detailed credit bureau information (who the Debt Counsellor is, whether the consumer is up to date with payments, whether they have a court/consent order etc).

Our members are indicating that this type of “bypass transfer” (where consumer is asked to request a 17w form first before the disreputable company subsequently requesting an official 17.7 form) has increased over the last several months. Consumers are promised by the entities that either their debt repayments will be lowered or they can be “removed” from debt counselling should they chose to go in this direction.

‘around 30% of eventual transfers start out in this fashion’

Members report that around 30% of eventual transfers start out in this fashion, meaning consumers seemingly copy/pasting email text sent to them by these entities. While we understand that the consumer demand/need will not go away, we believe this needs to be addressed urgently with adjustments to be made to the NCA.’

– NDCA