What Is A PDA?
When you first speak to your Debt Counsellor they may use the term “PDA” a lot. You may be wondering if they are talking about a Public Display of Affection. They are not. Nobody wants to see that. Get a room!
‘a specialised type of service provider to the debt review industry’
They are in fact talking about a specialised type of service provider to the debt review industry. These Payment Distribution Agents are registered with the National Credit Regulator (NCR) and assist consumers with distributing their monthly debt repayments and record keeping.
PDAs are an important part of the industry and are part of the National Credit Act, just like credit providers, credit bureaux and Debt Counsellors. When you begin debt review your Debt Counsellor will advise you to make your future debt repayments via a PDA instead of to each individual credit provider as you did in the past.
What Can They Do For Me?
Your chosen PDA will provide you with (their) bank details to deposit your monthly debt review repayment – This is a single payment towards all your debt as determined by your Debt Counsellor. Your Debt Counsellor will make sure you know this figure when you begin debt review (and after you get your court order).
Read More: Find Out About Debt Counselling Fees & Costs HERE
Having only one payment to make for your debts is a lot less complicated and can better be budgeted for. You will never have to worry that you have forgotten to pay one of your creditors. You will just make the new agreed repayment each month on the same day. Easy and Simple.
The PDA will then take this payment (that you have made) and split it up into all the smaller payment amounts that go to your different credit providers each month.
‘Having only one payment to make for your debts is a lot less complicated and can better be budgeted for’
The PDA will ensure that the payments go to the correct accounts (with the correct account numbers) with the help of both credit providers and the Debt Counsellor. It is worth noting that sometimes when a person begins debt review the reference number for a particular debt might change on the credit providers side or they may change the account that must be paid into (weird…but it happens).
The PDA will have their computers run a rough calculation of roughly how much money you probably still owe the credit provider given the date and amounts you pay. Though this will not 100% match what the credit providers have it will help you know roughly how your debt repayment is progressing.
The PDA will send you a statement each month to show that they have made the payment (along with the rough report of what is still outstanding).
Read More: Find Out About What To Expect In A Monthly PDA Statement HERE
The PDA will also provide proof of payment information to your Debt Counsellor (and you) in case there is ever an argument with a particular credit provider about how much was paid, on which day etc. This can and does happen so, having these proof of payments is vital.
Do I Have To Use A PDA?
No, you do not have to but most Debt Counsellors will very, very strongly recommend it. This is because it protects you, makes life simpler, makes it easier when disputes arise and PDAs carry insurance for mistakes.
Some people think that they can avoid paying the small fees charged by the PDAs and pay off their debts faster. It is true that you might save a few rand (not many, mind you) but you need to weigh up the work and risk verse the reward. Often the saving is very slight as PDA fees are low (in fact some transactions they do for free).
‘weigh up the work and risk verse the reward’
If you want to save R10 or R20 rand and make your life much more complicated, then you should (1) ensure you have the right account numbers and references, (2) make sure that you pay the correct amount each month to each of your credit providers (please note this amount can change from month to month according to the plan for the debt review so get the cascade repayment schedule of each month’s payments from your Debt Counsellor), (3) you should send proof of payment to your Debt Counsellor monthly (of each account) and (4) keep copies yourself, and (5) ensure that you make payment of the Debt Counsellors fees each month.
Some meticulous people find it satisfying to take an evening each month to sort out these payments. Most people however see the value in having the experts handle this side of debt review for them and make one easy payment monthly.
How Do I Choose The Right PDA?
Your Debt Counsellor will likely suggest that you use a particular PDA who they, personally, find to be the most effective and with who they have a good working relationship. They do not get a bonus or anything for referring you to a particular PDA. All fees etc from each PDA are exactly the same.
Some Debt Counsellors work with multiple PDAs and will be happy to make a suggestion when you begin the process.
Speak to your Debt Counsellor about which PDA they prefer to work with and why they feel that way.
Who Are The Registered PDAs?
There are currently 4 NCR registered PDAs. You can always visit the NCR website and check under their list of registrants to make sure that a PDA is legitimate and regularly checked and audited by the NCR. In the distant past, there was a PDA called CPE. They no longer exist.
The NCR Registered PDAs (alphabetically) currently are:
DC Partner PDA
iPDA (formerly known/associated with NPDA)
The National Credit Regulator audits these 4 service providers regularly to ensure that consumers payments are safe and that the PDAs are sticking to high industry standards as set out in regulations and their conditions of registration with the NCR.
PDAs Don’t Change Bank Details!
PDAs are great and will help you through your debt review. There is one important thing to know:
It is very important that you never fall for a scam where people call you (maybe even people you have dealt with in the past at a debt counselling firms or PDA) and tell you that the PDA has changed its banking details.
They may even try to sweeten the deal by telling you that you can pay less for your debt each month as long as you use the “new” banking details. Beware. The new banking details may belong to a scammer. PDAs do not change their banking details. It doesn’t happen. Don’t fall for a scam like this.
Talk To Your Debt Counsellor About The Role Of PDAs
So, be sure to talk to your Debt Counsellor about which PDA they recommend and why. Be sure to ask them what the PDA can do for you and how you will get a statement each month from your PDA.