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Van Rensburg Jordaan & Olivier Attorneys
How Does Debt Counselling Work?

Although the process is explained here, you may still have questions.  Remember that you are always welcome to contact us.

The aim of Debt Counselling, and our mission for you, is to recalculate your debt obligations so that you only pay what you can afford.  We do this by firstly looking at your income, and then at your necessary monthly living expenses that you need to budget for.  These are things like food, transportation, school fees and so on.  After you’ve paid all that, you should have an amount left, and it is this amount that you can really afford to pay debt with. 

We guide you through the process of budgeting for the necessary things in life, while trimming down on the luxury expenses.  In this way we arrive at a realistic amount that will be affordable for you but also acceptable to creditors, or, if not, will be found acceptable by court.

After this, we look at your monthly debt commitments.  We then compare the amount you are supposed to pay every month to the amount you can really afford to pay for each creditor.  This process results in a repayment proposal that we’ll formally put to your creditors in due course.  They will then have time to respond to that, and this response will either be an acceptance of the new offer, or a rejection of it, or perhaps a counter- proposal of what amount they will find acceptable.  Of course, in many cases we don’t receive a response at all.

Together with the proposal to creditors, you will also get a recommendation from us on how to pay from now on, and when to start.  As we negotiate with your creditors, we may need to make final adjustments to your budget and our offer.

It is important to take note that we do not need consent or permission from all creditors for the process to work.  As long as we make a realistic offer we will ask the court to make the final decision on this, and the court will then make an order.  If the court decided an offer is acceptable, then all creditors, whether they accepted that offer or not, and even if they never responded to us, are bound by the decision of the court.

The National Credit Act gives us 60 business days (3 months) to work all this out.  For the first two months, you do not need to pay any instalments on credit agreements.  We will tell you how to use your money during those two months, and it will mainly be to pay our fees and put money aside for the court process.  We may also recommend that you settle one or more smaller accounts.  From the end of the third month, you will, in most cases, resume payment to your creditors.  From then on, you will pay what we offered, until the court has made a decision on the matter.

The following points are very important:

  • As soon as we have accepted your application, we immediately notify your creditors so that they stop contacting you to make payments, or threaten to take away your house, cars or furniture. 
  • A debt counsellor must refer a matter to court within the 60 days.  If not, creditors can withdraw from the process if the 60 days are over.
  • If a matter was referred to court and a court order is granted, you will be protected by that order until you have repaid your debt, as long as you keep up your end of it and keep paying what we offered.
  • For us to help you, you must provide correct information, be truthful in your application and keep us updated of any changes in your circumstances.
  • Creditors who have already taken legal action against you by the time you apply do not have to be part of the process (legal action in the issue of a summons, not just a threatening letter – but the letter is usually a sign that summons is not far off).  The National Credit Act only protects you against those creditors who have not sued yet.  While we try our best to negotiate with everybody, even those who do not have to be part of the process, it is crucial that you do not wait until it is too late!  Contact us as soon as you realise that you can’t afford your monthly payments anymore.

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