DCRS Vehicle Changes Go Live
Many Debt Counsellors have given up on using a Credit Provider backed proposal software called DCRS. This automated proposal and calculation software suggests repayment terms that credit providers will, in theory, automatically accept. The system is often promoted by the National Credit Regulator (NCR).
Balloon Payments Burst DCRS Use
One problem that has come to the fore recently is that more and more consumers entering debt review have done so with the baggage of a vehicle with a big balloon repayment (a big payment right at the end of their repayment term). When Debt Counsellors have, in the past, put the figures into this DCRS system it has often suggested that consumers pay more for their vehicle under debt review than outside of debt review.
Eg. The consumer paid R2200 before debt review but had a massive amount due on their final debt repayment. Under debt review where the system tried to divide all the payments over the number of months evenly, the payment suggested was R3100. Suddenly the consumer and Debt Counsellor would have to try look for an additional amount of money somewhere which would often simply be impossible. Since vehicle finance is often one of the biggest debts people have this has made it very hard to find a figure consumers can actually afford under debt review. If the debt was not included into the calculations credit providers would kick up a fuss. All of which meant that using DCRS was a big waste of time for many, many months (even years) since this situation became common. However, if DCRS was not used to make the proposal then other better proposals using other software could be made to the courts that the consumer could actually realistically afford.
Now the DCRS system has finally been changed to allow for consumers entering debt review with a balloon repayment amount. The new maximum term for vehicles with balloon payments can now be extended all the way up to 100 months from inception of the contract if needed.
‘the new maximum term for vehicles with balloon payments can now be extended all the way up to 100 months’
This will make it much easier for Debt Counsellors to come up with reasonable proposals using DCRS that consumers can afford and that credit providers will automatically accept.
But what about those who do not have balloon repayments? The good news is that since many vehicles are now costing more than ever and thus monthly repayment amounts are now much higher changes have also been made for these consumers. Accounts without balloon amounts will be extended from 84 months up to 90 months (from the inception of the credit contract). This means that even those who do not have a balloon payment will benefit and their vehicle repayment amounts will drop.
Will It Be Enough?
It remains to be seen if finally making these long requested changes will once again open the flood gates of DCRS. The DTI recently put out possible changes to regulations about debt review that will require that Debt Counsellors must also pay for the upkeep of the rather pricey DCRS system (not just credit providers). For this to have a reasonable chance of legal success, without pushback, DCRS would have to meet the needs of both sides of the debt review industry. The recent DCRS changes which are now live on the various Payment Distribution Agents software will certainly help in this regard.