www.debtcounsellingsa.co.za

DebtfreeSouth Africa’s debt counselling magazine

MAY 2010

Many Debt Counsellors live in trepidation of this time as they fear that the cost of living over this time period (and afterward) may skyrocket as shops and restaurants hike their prices exorbitantly to try “milk” those coming to see the world cup. Will taxi prices shoot up? Will a can of Coke cost R10? Well, these are things to be concerned about.

As Debt Counsellors we make proposals to Credit Providers that look months and years into the future. These proposals have to take into account the increasing cost of living vs. predicted increases in the clients income. This is at best an imprecise science and events like the World Cup may throw off our predictions.

This is why Debt Counsellors are obligated to do a yearly review with each client.

Have a look at page eight for an outsiders perspective on the debt review process in our submission from Beyond Publishing.

So World Cup here we come. just keep an eye your costs.

Editor

Editor

ContentsEditors notes

Decoding the jargon

Your debt, your right to know

Precedents

Keeping you in the know

Mini directory

02

03

04

06

07

08

So the Football World Cup is almost here.

A Form 17.4 document is basically the form which says that a person is no longer under debt review for one reason or another. A copy of this letter is sent out to all creditors included in the debt review when it is terminated. A debt review can be terminated for one of several reasons. In all cases notification is made to the NCR and via them to the Credit Bureaus. The first reason is if a client decides they do not wish to continue with the debt review process. This is called a voluntary withdrawal and in such a case a Voluntary Withdrawal Form 17.4 will be issued.Sometimes a Debt Counsellor will issue a Form 17.4 because the client is not cooperating with the Debt Counsellor (generally this might occur early in the process). For instance: the Debt Counsellor may have asked for documents which will prove the clients income or expenses and the client fails to make these available despite repeated requests from the counsellor. This shows that the client may be trying to abuse the system and is non-cooperative. It would then be within the Debt Counsellor’s rights to issue a termination letter or Non Cooperation Form 17.4.If a client misses restructured payments as per the restructuring repayment proposal or Court order then Creditors are within their rights to ask for the Debt Review to be terminated. In

such a case they will send notification to the Debt Counsellor and after he confirms the non payment he will then issue a Non Payment Form 17.4. The Debt Counsellor may also issue this document without prompting from a Credit Provider. The reason most people are kicked out of the Debt Review process is due to non payment. The exception to this situation is where a Form 17.3 has been issued.(See debtfree April 2010 issue for more details)A Debt Counsellor is not there to help clients “get away with” not paying the creditors. Rather the Debt Counsellor has an obligation to help both parties (consumers and creditors) find a fair and reasonable arrangement to settle the debt over time. When switching from one Debt Counsellor to another; some creditors may incorrectly ask for a Form 17.4 due to a misunderstanding of what the Form actually is. Since the consumer is not terminating the Debt Review process or having the Debt Review terminated by the Debt Counsellor a Form 17.4 would not be appropriate. At present, however there is unfortunately no official NCR “Transfer of Debt Counsellor” Form.Of course no Debt Counsellor ever wants to issue the other type of Form 17.4 which exists the Client deceased Form 17.4.

dECodiNg thE jargoN Form 17.4

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dErry VS. goliathYou may have heard of that crazy Debt Counsellor in Cape Town who is taking on that large taxi financing company. If you haven’t; her name is Derry Burge and she operates from the Strand in Cape Town. Derry (along with another debt counsellor in the north of the country) has taken on a large number of taxi driver clients who find themselves under financial stress and are over indebted at this time. Many clients under debt

review have a misconception about how much effort goes into helping them with their debt review. Clients sometimes think that all a debt counsellor does is make a single phone call to a call centre and after a five minute conversation everything is sorted out- Well this is not the case.Well, Derry’s experiences with regard to

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dealing with this large taxi financing company shows how much effort goes into helping debt review clients when some creditors are unwilling to come to a negotiated solution. At present in helping her 750 taxi driver clients, Derry has spent nearly 1.5 million Rand of her own funds on legal fees trying to help

her clients. She has taken the matter to the Magistrates Courts, the High Court and even the Parliamentary Court in an effort to help her clients. Over the last few months while doing her debt review work she has received several death threats and even had one creditor trying to have her arrested and thrown in jail so things have not been easy. As they say: “ no good deed....” A Debt Counsellor has to weigh the needs of the consumer with the long term interests of Credit Providers. Where the Debt Counsellor feels certain assets are best returned to a Credit Provider they will recommend so. However where the Credit Provider has offered credit to a consumer with a reasonable expectation that they will run into financial difficulty in repaying the amount, this is called “reckless lending” and is illegal under the National Credit Act (NCA).At present; Derry has 55 reckless lending applications in the High Court to do with taxi financing and is trying to ensure that her

clients, as well as their creditors, have stuck to the precepts of the NCA.Sadly, many of her clients who have cases under debt review (and before the Courts) have had their taxis repossessed to be “put into storage”. This obviously stops these clients from being able to earn a living and repay any of their creditors at all (including the one that financed the taxi in the first place).One of Derry’s clients in this situation was shocked to see her own taxi back on the road being driven by a stranger. When this client asked the driver what was going on?, He replied that he had bought the Taxi from a dealership. Obviously there is a problem with enforcing the NCA if such things are actually going on and Derry continues to pursue legal action against this particular Credit Provider to try prevent such occurrences. Clients need to realize that, while a Debt Counsellor is there to help them, the counsellor is not “all powerful”. Also clients need to understand that often the Debt Counsellor is as frustrated as they are by actions of Credit Providers that do not wish to negotiate a solution that also benefits the consumer. Slowly the debt review process has become through necessity an increasingly litigious one. Derry has taken on a large financial institution in regard to their lending practices and they have not been willing to make arrangements that allow for a measured recovery of funds over time. Whether this approach has benefited them remains to be seen but things “are not looking good for them” - according to one source. We all know how the story of Derry vs. Goliath should end... and we will watch with baited breath to see who will fall.

She has taken the matter to the Magistrates Courts, the high Court and even the Parliamentary Court in an effort to help her clients over the last few months

dig yoUrSElF oUt oF thE dEBt PitWe are well into 2010, and not a few people find themselves in serious debt after having over-extended themselves financially, during the end of year holidays. Personal debt becomes critical at the point where individuals cannot afford to repay the minimum monthly balance due on their credit facilities. In years past, those who had found themselves in the above situation, had to suffer much indignity

and harassment and were, in almost no time, blacklisted. In recent years, however, there is a much more dignified way to dig oneself out of the debt “pit”, so to speak. Yes, I am referring to what is known, today, as debt counselling.

thE Work oF thE ModErN day dEBt CoUNSEllor aNd SoME rElatEd iSSUESEvery Debt Counsellor must be registered

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with the NCR (National Credit Regulator) in compliance with the National Credit Act 34 of 2005. Simply put, the NCR is tasked with the responsibility of regulating all aspects of South Africa’s credit industry. The debt counsellor’s first and most important, order of business is to effectively council those people who come to seek his help. What does this council entail? Well, the Debt Counsellor must get his client to understand and to admit that he has fallen into a bad habit, i.e. that of purchasing goods or services without having sufficient means to pay for it. At the time of the interview, the Debt Counsellor must ensure that the client will, at no time, feel condemned for the financial situation he is in. The counsellor must explain to the client that anyone, whosoever, can fall into a bad habit; that no human being is exempt from it. At the very same time the Debt Counsellor must begin the process of patiently instilling principles of sound personal financial management into his client, so that they will not fall into the same habit in the future. Some principles of healthy personal financial management your Debt Counsellor might introduce you to, are: a) Learning how to live within your means and then putting this into practice in everyday life.b) Establishing an emergency fund and then exercising the discipline not to touch these accruing funds for any reason other than that for which it was originally purposed.c) Learning to save up and buy things using cash. To see your money physically diminishing in your purse as you make purchases still remains the very best financial reality check, and when you have no money left, the solution cannot be simpler... What I cannot pay for, I simply cannot purchase.

d) Planning (budgeting, if you like) for your income vs expenses, over the coming months. Of the above-mentioned four disciplines, the latter has always, somehow, been the most difficult for me, to master. Most Debt counsellors are, however, quite skilled in assisting their clients to master this specific discipline. I have listed only four principles here, but there are literally hundreds more which the Debt Counsellor can introduce to his client in order for them to learn to develop healthy financial

habits over time. Debt Counsellors will just need to find those few techniques with the help of his client, which will work best for the client. The client must believe that the Debt Counsellor is on his side and that the Counsellor is working for his good, at all times, in order for the entire debt counselling process to have a positive and lasting outcome. When the Debt Counsellor is satisfied that his client fully comprehends, not only the negative consequences of bad personal financial management, but even more so, the benefits of sound financial management, the Counsellor can immediately proceed to the next step. In exchange for a once off restructuring fee to the the Debt Counsellor can now begin the process of negotiating the lowest pay back terms, on behalf of his client, with the client’s creditors.

the debt Counsellor’s first, and most important, order of business is to effectively council those people who come to seek their help

Debt counselling businesses have considerable powers at their disposal to do the above negotiations, by authority of the National Credit Act 34 of 2005, and more specifically, Section 86 of the Act.The Debt Counsellor will make findings after an investigation of the client’s level of indebtedness to his creditors. If it is found that the client is not over-indebted, but that he is likely to experience difficulties satisfying his obligations, the Debt Counsellor will issue a form 17.2 document to his creditors just as if he were totally over-indebted at present and begin negotiations and make restructuring proposals to all the creditors.The Debt Counsellor will then present his particular finding to a Magistrate, who will rule on it and issue an appropriate Court order. The Court order may, in some situations, state that one or more of the client’s or consumer’s credit agreements was “reckless credit”, which means that no repayments would be made to that particular debt and the client would no longer be liable to repay the amount. Not so long ago a Debt Counsellor told me of a case where a man was repaying his creditors an astronomical R 80,000 per month at the time he first went to see the Counsellor for help. After the Counsellor had restructured his client’s debt, the total monthly repayments were reduced to somewhere in the region of R6000. Well, to say that I was stunned after hearing the above, would be an understatement. Even if you should argue that this is an extreme

case (which it is), it is nevertheless proof of the considerable negotiating powers these new career professionals possess.In today’s world of plastic money it is easier than ever before to fall into serious debt. It can, moreover, happen very quickly, and in a certain sense, almost unnoticed. If you have joined the ranks of those who have fallen into this modern day debt trap, please do not spend endless hours analysing how this could have happened to you and bemoaning your fate, but rather make your way, quickly, to the nearest Debt Counsellor. These professionals are there to help you and with your active participation, they will be able to help you, in no time, in at least two significant ways... i.e. by beginning to teach you a fresh and healthy approach to manage your personal finances as well as by significantly reducing your current monthly repayments to your creditors. Be bold, be brave. Put your pride on hold. Go for debt counselling. You will not have to look far to find a Counsellor. They are accessible everywhere, not least of all because of the ever increasing demand for their unique expertise in our modern world.

Mayan Viljoenwww.beyondpublishing.co.za

have you joined the ranks of those who have fallen into a modern day debt trap?

Credit lifeCoNSUMEr

What is it? Do you need it?A client approached me the other day. He told me that he had been to another debt counselling company but was unhappy with the way they conducted their interview with him. At the end of their evaluation with him the consultant conducting the interview told him that they could restructure his debt to R7000.00 each month but did not want to include the car. When he said he would not be able to afford the items he felt were necessary in his budget the consultant reportedly told him to cancel his insurance policies. Now it is not clear if the consultant was FAIS accredited however there is reason for concern here.Can clients under debt review be without insurance? Ask someone in the insurance field and they will say no. Ask creditors and they will agree. Most credit providers make you pay credit life premiums on all (or most) of your accounts. In the old days this cover was simply part of your installment, and you were not even aware that you had it… and the credit providers seldom told you that you did - in case you claimed.With the advent of the National Credit Act, however, they are not allowed to embed insurance into your installment any more. Those who actually abide by the law, will inform you that such cover is compulsory, and that it is a condition to them granting you the credit. You thus end up paying credit life premiums on most of your accounts, whether you want

Credit lifeWhat is it? Do you need it?

to or not. Credit life protects your family in the sad event of you passing away. It will settle all your outstanding debts, leaving your family with all of your assets and not the debt. The problem, though, is that most credit providers are ridiculously expensive when it comes to credit life rates. A credit life policy is normally rated as an amount per R1000. For example: if the rate is: R 5 per R1 000 and your loan amount is R 10 000 you will pay 10 x 5 = R 50 per month. And this would hold true for each of your credit agreements. Most credit providers rate their credit life policies from R 5 per R1000 but some charge up to R 25 per R 1000. At R25 per 1000, your credit life premium can be more than your repayment of the loan which is just ridiculous. Though this cover is compulsory you can choose which insurance company you want to place

the cover with. One company called Debtplan offers this cover at only R2.50 per R1000 even on accounts that used to have R25 per R1000 cover. Some companies that specialize in this form of insurance for those under Debt Review also offer extra benefits with their credit life cover, such as: Death, Disability, Dread Disease and importantly Retrenchment cover (This means they pay your debt repayments for 6 months if you are retrenched).You may find that the alternative insurance cover company will cancel your existing policies at your creditors for you and issue you with a new, less expensive policy and provide your credit providers with proof of your cover.This means less work for you. Cheaper credit life payments mean you save money each month, freeing up funds for other necessities.

PrECEdENtSThe following important judgement was handed down on 23 April 2010. The case was heard in the South Gauteng High Court, Johannesburg.

In the matter between

Standard Bank of South africa and kruger, Werner hugo, case number 2009/45438

and

Standard Bank of South africa and Pretorius, theresa lynn, case number 2009/39057

before

F kathree-Setiloane, acting judge of the South gauteng high Court, johannesburg

The question was if a credit provider can terminate a debt review process once it

has been referred by a debt counsellor to a Magistrate Court for Consideration. In terms of the Judge’s view credit providers cannot terminate the debt review process once it has been referred to a Magistrate Court.

Once the matter has been referred to a Magistrate Court Section 87 of the NCA applies and consequently credit providers cannot terminate in terms of Section 86 of the NCA.

Also mentioned was the fact that the 60 days refered to were in regard to the review by the debt counsellor and not that of a Magistrates Court.

The ruling also had reference to section 129 notices once a matter has been refered to a Magistrates Court.

This is an important case for the debt review process.

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Please remember that all DC’s need to submit their Quarterly reports to the NCR by May 15 2010 (Saturday). This would be the report for activity between 1 January 2010 and 31 March 2010 namely the 1st Quarter of the year. The next report is due for the second Quarter on 15 August (sunday)

dC rEMiNdEr

NEWS FlaSh

Petrus Martinus Ferreira trading as Ferreira Debt Counsellors (FDC) had his registration cancelled. Also ralph Zulu of GNR & Associates had his registration cancelled, but this was then adjusted to be a one year suspension. “Both these Debt Counsellors were found to have repeatedly contravened the NCA and their conditions of registration,” the NCT said.

The Tribunal ruled that Ferreira through FDC had contravened the NCA in a number of ways. “This failure on the part of Ferreira placed his clients at serious risk in that credit providers could institute legal proceedings against such clients. “These legal proceedings could result in clients losing their property including homes and vehicles,” the NCT said. The NCR found that Mr. Ferreira not onlyfailed to maintain adequate records and keep relevant copies of documentation to comply with the NCA, but he had also set up a close corporation as a Payment Distribution Agent, despite this not having been approved by the NCR. Mr. Ferreira was now required to give a list of all his past and current clients to the NCR so that the necessary steps could be taken to assist them.

In the matter of Mr. Zulu, the NCR found that Mr. Zulu had not adhered to several NCA and regulatory requirements with regard to prescribed timeframes, keeping of proper records, and following the debt counselling process through to the end by obtaining Magistrate’s court orders in respect of his clients. Last year the Tribunal had adopted a rehabilitative approach in disciplining Mr. Zulu rather than penalizing him with fines or immediate deregistration. Following this, they found that Mr. Zulu’s administration of files had improved considerably. “The Tribunal decided to cancel his registration, however, this was suspended for one year until February 2011, based on a number of conditions which included, that Mr. Zulu does not further contravene the NCA; he will assist clients whose debt review process had been terminated due to his failure to comply with the NCA; and that he pays outstanding costs in respect of investigations conducted by theRegulator.”

This information supplied by The NCT

During April 2010 the registration of two non-compliant debt counsellors was cancelled by the National Consumer Tribunal.

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dEBt CoUNSElliNg

aa debt Counselling CentreAnthea JohannesNCRDC531Tel: +27 (0) 21 982 0522Cell: +27 (0) 84 402 7032

alan Watts NCRDC 962NCR registered Debt Counsellor Tel: 084 4448439 Fax: 086 6501954alan@active-debt-counselling.co.zawww.active-debt-counselling.co.za

Central Sa debt Counsellors082 950 7806Fax: 086 563 1621

Consumer assistAndre Snyman Tel: 0861 628 628

darran ManikamNCRDC704debt@mailbox.co.za

durban debt Counselling ServicesSuite 112, 1st floor Union Club Building353 Smith StreetDurban, 4001Tel: 031 301-7893Fax: 031 301-5809phumla.ngema@telkomsa.net

debt Counselling South africaCape Town BranchTel: 021 919 66 94Rod De WittNCRDC831Visit: www.debtcounsellingsa.co.zafor info about debt counselling

Fincorp debt Counsellors ccCecilia Zwarts fincorpdc@yahoo.com

helpdesk debt CounsellorsAllan HoffmanTel: 0861 000 754

help-U-debt (Vaal triangle) WanineTel: 082 445 3967

help-U-debt (Potchefstroom)Madra083 390 3275

help-U-debt (Parys)Marilouise082 920 6249

help-U-debt (Vanderbijlpark)Herma083 320 8303

think green debt CounsellingSandi Pauwsandipauw@mweb.co.zaTel : 012 991 6638Cell : 082 460 7800Fax : 086 219 2615

incentive debt Counselling“Paving the way to a Debt Free Tommorrow”Darran Manikam NCRDC704Tel: (031) 409 9379Fax: (031) 409 1327Cell: 0845898286Branches: Phoenix and Shallcross

indigo debt counsellors CCTel: 087 808 9734 Fax: 086 580 8675 indigodc@iburst.co.za

PBC“Consulting your future today”Are your credit cards, car and loan accounts in a mess? Are you running behind on all your payments? PBC Debt Counsellors can help you! We arrange One Payment for all your debt.Tel: 086 9000 1

U-Win debt CounsellorsCoreli RoosNCRDC509Aliwal North, Burgersdorp, Bethulie, GariepDam, Smithfield, SpringfonteinCell:079 626 66241croos@global.co.za

SUPPort SErViCES

Staff line Ndizani Executive recruitmentCell no: 083 3028163Direct Line: (011) 468 - 2150E- Mail: saki@staffline.co.za

Blank designFor all design and marketing needs including websites, brochures, business cards etc.Steve Rosenbergsteve@blankds.com083 700 2020www.blankds.com

designtimesSouth Africa’s creative resourcewww.designtimes.co.za

SErViCE dirECtory

FiNaNCial

aBSa Customer debt repair line0860 356 356

Credit ombudsman0861 662837

Experian011 799-3400 debtcounsel@experian.co.za

Eric StresoFinancial PlannerB Juris LL B CFP MBATel: 0833273358Fax: 086 612 7912

Fair debt0829019788 or 012-3772558ray@fairdebt.co.za

PaCFiN Financial Solutions Head OfficeTel: +27 11 9757445Fax: 0865368783

36 Van Riebeeck roadKempton Park 1619PO Box 7733, Birchleigh, 1621pieter@pacfin.co.za

Monte Carlo BuildingNo 8 VoortrekkerstreetKempton Park 1619

Kempton ParkContact: Reyno CoetzeeTel: +27 11 3945363Fax: 0866048002Cell: +27 73 3690884kemptonpark@pacfin.co.za

Boksburg / GermistonContact: Armand PosthumusTel: +27 11 8921911Fax: 0865620378

NelspruitContact: Ann BakerTel: +27 13 7415559Fax: 0880 1374 15559Cell: +27 82 9024236jeleroux@telkomsa.net

SpringsContact: Wynand MclachlanTel: +27 11 8113728Fax: +27 11 8113728Cell: +27 83 2754014/5wynmc@telkomsa.net

gooseberry Business advisoryTel: 012 644 0589

NedbankDebt Rehabilitation & Recoveries Services0860 109 279

Std BankDebt review HelplineTelephone: 0861 111 402

transUnion0861 482 482

thinkmoneyFinancial comparison websiteContact: Gareth MountainTel: 079 0996 798www.thinkmoney.co.za

WiZard Vereeniging Making Mortgage MagicWanine SmitTel:+27 16 454 1132Fax:+27 86 686 3678 Cell:+27 82 445 3967 www.wizard.za.com

FiNaNCial PlaNNiNg

Eric StresoFinancial PlannerB Juris LL B CFP MBATel: 0833273358Fax: 086 612 7912

lEgal

Brett Carnegie attorneysTel: +27 (21) 4470332 Fax: +27 (21) 4470338 Mobile: +27 (0)82 320 6099 www.carnegielaw.co.zaPhysical Address: Suite 23(B) Unit 8 Waverley Business Park Mowbray 7700

Bornman associates attorneysABSA Building, 32 Voortrekker road4th floor Bellville 7530 Tel.021 949 0458Fax 021 949 5957

CrEdit BUrEaUS

Compuscan 0861 514 131www.compuscan.co.za

Computer Profile Bureau0861 28 7328www.c-p-b.co.za

Experianwww.experian.co.zaBusiness- 0861 63 60 70 Consumer- 0861 10 5665

Micro lenders Credit Bureau 0861 28 7328 www.mlcb.co.za

transUnion 0861 886 466www.transunion.co.za

XdS 0860 937 000 www.xds.co.za

othEr

association of debt recovery Agents: 011 781 3337 www.adraonline.co.za

Banking ombud0860 800 900 www.obssa.co.za

Credit Bureau association011 886 8519 www.cba.co.za

Credit Providers association011 789 6825 www.cpa.org.za

department of trade and industry0861 843 384 www.thedti.gov.za

Financial advisory and intermediary Services ombud012 470 9080 www.faisombud.co.za

Financial Services Board012 428 8000 www.fsb.co.za

Furniture traders association 011 789 6770

legal resources Centre011 836 9831 www.lrc.org.za

long term insurance ombud021 657 5000 www.ombud.co.za

Micro Finance South africa012 345 0809 www.mfsa.net

Motor industry ombud012 841 2945 www.miosa.co.za

National Credit regulator0860 627 627 www.ncr.org.za

ombud for Short term insurance011 726 8900 www.osti.co.za

Pension Funds adjudicator021 674 0209 www.pfa.org.za

South african Fraud Prevention0860 101 248 www.safps.org.za

the Banking association011 370 3500 www.banking.org.za

idENtity thEFt

Sa FraUd ProtECtioN SErViCE (FrEE SErViCE)www.safps.org.za0860 101 248

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