What happens if you are in arrears with your debt review?
- Contact your debt counsellor to arrange for a form 17.3 which must be supported by proof of reduced income (you must provide the debt counsellor with proof of circumstances, such as reduced income or short-time, etc);
- You must tell the debt counsellor when/how you intend catching up on the short payments;
- Your debt counsellor will prepare a new payment plan based on the information that you provided;
If you stop payments for whatever reason, the creditors have the right to terminate your debt review. If termination occurs, then your debt counsellor has a small window of opportunity to communicate with the creditors to request reinstatement into debt review. But remember, if you stop payments, and your debt review is terminated by creditors, this does not mean that you are out of debt review in the eyes of the law.
When you stop payments, your debt counsellor will contact you to encourage you to catch up. If you do not catch up, your debt counsellor will have no alternative but to suspend their services. This does not mean that you are out of debt review, only that your debt counsellor will no longer manage your accounts for you.
If this happens, the collections calls will recommence, and there’s not much that can be done to stop them.
So, what happens when you are terminated or suspended?
- The debt counsellor can no longer make any further arrangements on your behalf;
- The reason for this is that the debt review agreement was not adhered to
- Your creditors now have the right to institute other legal action against you to obtain full settlement;
- It is now up to you to settle your debt and provide the debt counsellor with all your paid up letters;
- Once all your debt is settled, the debt counsellor must issue you with a clearance certificate, declaring you debt-free;
Our advice is, do not stop paying.
If you are dissatisfied with your debt counsellor and you are paying per the agreement, you have recourse to lodge a complaint at the NCR (Form 29) or to transfer to a more suitable debt counsellor. If you stop paying, there is very little chance that you will be able to re-enter debt review, and very little another debt counsellor could do to help you.
When you are under debt review, remember that the debt remains yours, so you need to participate actively in the process. Keep in touch with your debt counsellor and monitor your PDA statements to be sure that your balance is reducing. You will not see much change at the beginning of debt review and the progress may seem slow, but once your court order has been granted and you are paying lower interest rates you will see a difference. Once one or more of your creditors becomes paid up, you will start to see a huge difference.
Stick it out! It’s worth it!
If you missed Part 1, be sure to check it out here. There, we discuss how to deal with creditor phone calls when you’re already under debt review.