Banks Forego Billions In Fees To Help Consumer In Debt Review
When consumers enter debt review then many Debt Counsellors will approach their credit providers and ask them to agree (in advance of the court case) to reduce the amount they are asking from the consumers each month. The Debt Counsellor will send information to the credit providers about how the consumer is using their available funds to care for their family’s monthly needs, as well as, info about their other credit providers and debts.
‘simply taking less money from a consumer while the interest rate on the account stays the same can quickly lead to the balances shooting up’
The credit providers are not obliged to agree to the proposal (which will eventually go before a court*) but they can do so if they are happy with the offer. As you can imagine though, simply taking less money from a consumer while the interest rate on the account stays the same can quickly lead to the balances shooting up as fees and charges are added to the account. Consumers would feel worried and the credit providers books would start to look very bad as the debt got bigger and bigger. In law, something called In Duplum or NCA Section 103(5) prevents the debt from growing endlessly and rather ensures it would only potentially double before being paid off but that would still not be ideal.
As a solution, most credit providers have decided to accept offers from Debt Counsellors and even cut out the extra fees and even reduce interest rates to help their clients.
The Banking Association of South Africa (BASA) recently released some figures about how much they have been prepared to give their clients under debt review in concessions during 2016 and 2017.
2017 – R4 Billion
This once again goes to show how consumers under debt review benefit greatly from the willingness of credit providers to cooperate with a well run and organised system of repaying debt responsibly.
If you are having a problem paying off your debts each month and have been having to pick which credit provider to pay this month then it is time to go talk to a professional Debt Counsellor.
*If credit providers decide not to accept the proposals made then when the matter goes to court the Magistrate can adjust the payment amounts (and soon interest rates if the pending NCA amendments happen) even if the credit provider is not happy.