If You Miss Your Payment This Month
December is one of the two months of the year where many people fall out of debt review and plunge back into a world of financial pain.
December can be a tricky month where it is very hard to stick to your budget. Due to social pressure and pressure from family and friends who are not invested in your financial recovery you may find that people around you pressure you into overspending or spending on items that you have not budgeted for. Chasing a feeling of freedom and fun you may begin to go beyond your budget and soon find that you do not have enough funds to cover your usual living expenses and your debt repayment.
At this point, many people decide to miss their debt review payment especially if they have not been saving throughout the year toward the extra expenses that parents face in January with back to school costs. They hope that somehow the credit providers will not care that they are breaking the court order arrangement. Of course, this is foolish and credit providers will soon begin to take new legal action against them.
What to Expect If You Miss A Payment
If you miss a debt review payment you will first get a letter from your Debt Counsellor telling you that you have 10 days to sort the situation out or they will withdraw their services. Around the same time, the credit providers (normally any asset-based credit providers) will send a letter called an 86(10) “termination” letter. This letter says they will be ending their participation in the debt review.* They will then hand the account from the debt review department over to collections or legal to start the usual collections process.
At the same time the credit providers will now rework the maths on your accounts and add back in extra fees, interest and charges that they removed during the debt review. They will demand that you catch up on these fees at once now that you are no longer protected by the debt review. All this while beginning legal action.
This means that they will send you a summons to go to court. Then after waiting the right amount of time they will go to court and get a judgement which they can use to collect funds from you over the next 30 years. In between all this they may also send you messages or call you to ask for money (like they did before you entered debt review). If you have a car or home the bank will be eager to get the court to give them permission to take the asset and sell it on auction. If you want to stop this from happening you will have to get some legal advice or help and fight the matter at court.
NCR Section 86(11) – Put it back into debt review
You could ask the court to put the account back into debt review (which the court can do) in terms of NCA section 86(11). It can be hard to convince a court to do so if you have already failed to stick to the debt review court order and the court may rather decide to grant judgement and allow your asset to be sold.
‘this may mean that the Debt Counsellor will assist you to deal with the debt review as it falls apart as best they can’
It is possible that your Debt Counsellor may feel sorry for you and decide to try help you even though you are not sticking to the court order. You may convince them that you will try to make up the shortfall over the next few months (which since they know your very tight budget is probably impossible). So, this may mean that the Debt Counsellor will assist you to deal with the debt review as it falls apart as best they can. They may be able to convince one or two of the credit providers not to sue you and to keep taking payments. It is however not up to them. It is up to the credit providers as to what they want to do with someone who has broken the arrangement.
You should be realistic about these things and realise that if you miss a payment your debt review will fall apart. You will be trapped outside the credit market for years to come and you will end up paying so much more in extra fees and interest than if you had stuck to the debt review.
‘You should be realistic about these things and realise that if you miss a payment your debt review will fall apart’
Do not fool yourself into thinking that the Debt Counsellor can wave a magic wand and make the situation go away. Life will be much harder and paying off your debts will take you many more months or years than through debt review. Your credit record and score will be damaged and you will face a lot of extra fees and charges. You should also expect to deal with the stress that comes form people chasing you for money again. If you are thinking of missing your December payment then these are some things you should keep in mind.
* it is possible they may simply proceed to sending a summons at this time.