Not Paying Via a PDA Does Not Mean Skipping Debt Counsellor Fees
The National Credit Act introduced firms called Payment Distribution Agencies (PDA). These firms help simplify consumer’s debt review payments and assist them to make the right payment on the right day to the right accounts. It is often a challenge for consumers to make the correct payment to the right accounts before they enter debt review. Once the process begins the payment arrangements get even more complicated as the amounts paid shift and change over time (due to what is called cascading payments). Many consumers will find managing this to be (1) undesirable hard work and (2) complicated.
PDAs also assist when disputes over payments arise (they often do) as they track all payments and roughly calculate what the balances should be according to the court order. This is something that many consumers find themselves unable to do.
Things to Keep in Mind When Paying Yourself
If you are able to handle these however you are able to save a few rand each month on fees to the PDA (you still have to pay normal bank fees to do all the payments, however). What should you keep in mind if you are making payments directly to credit providers?
- What does your Court Order say about how you will pay? Does it mention that you will use a PDA or not? It is important that you do not break your court order.
- You have to keep proof of payments of each payment you make to your credit providers and supply your debt counsellor with a copy of each (every time). This will help when you later have to fight with credit providers about the balances and fees they have on your accounts.
- Just because you are not paying via a PDA does not mean you do not have to pay your Debt Counsellor’s monthly aftercare fees. These are also in the court order and will ensure you keep getting help from the Debt Counsellor throughout the process. Do not stop making these small payments. They are normally only a few rand anyway and are well worth it.
‘You should also be very wary of deciding that just because the debt review is now running you can start to ignore just some of the court order’
Trying to Save a Few Bucks
If you are in the process and suddenly decide not to make use of your PDA you should speak to your Debt Counsellor about this first. You may feel this will save you some money but you will soon find this is not really the case. You should also be very wary of deciding that just because the debt review is now running you can start to ignore just some of the court order (eg. using the PDA and paying the Debt Counsellor). If you stop paying your Debt Counsellor you should expect that things will eventually fall apart as they will not be helping you (since you are not paying them).
‘If you stop paying your Debt Counsellor you should expect that things will eventually fall apart’
When the time comes for a consumer to get a clearance certificate (when their debts are paid off) they will have to go to their Debt Counsellor and ask for help. The Debt Counsellor will check if all aftercare payments have been made and may (1) ask for any missing payments or (2) may decide to charge a portion of the missing payments to assist the consumer further. Professionals work for fees. This is pretty normal and consumers should not be surprised if this happens.
Can Your Debt Counsellor Take Funds Directly From you?
Something to keep in mind for Debt Counsellors who advise their clients that they can handle the responsibility of doing payments themselves (and not via PDA). These Debt Counsellors should check their terms and conditions of registration to see if they can accept monthly payments of aftercare fees directly from consumers or if they are obliged to make use of a PDA to collect such fees. It is important to stick to the T&Cs of the trade. Note: Some DCs registration conditions differ.