With many South Africans in financial distress and struggling to repay debts as a result of reduced and complete loss of income, the National Credit Regulator (NCR) has reminded consumers of the measures available to ease their financial burdens.
Established in terms of the National Credit Act, the regulator is responsible for the regulation of the South African credit industry while also monitoring the conduct of among others credit providers, and credit bureaus in their compliance with the NCA as amended.
Debt counselling/review
Debt counselling is a debt relief measure intended to assist over-indebted consumers struggling with debt, through budget advice, negotiation with credit providers for reduced payments, extension of repayment term and restructuring of debt. Debt counselling also offers consumers protection against repossession or legal action by credit providers.
“Consumers who have been negatively impacted by the effects of the Covid-19 pandemic resulting in reduced income are encouraged to consider this debt relief measure since an income is required to apply for debt counselling,” said the NCR’s acting manager for Education and Communication, Advocate Kedilatile Legodi.
Debt counselling is offered by DebtCare as an NCR-registered debt counselling firm.
Credit Life Insurance
Consumers can consider several NCA debt relief measures, including Credit Life Insurance. This is insurance that a consumer purchases when applying for credit or loan. It covers the outstanding debt in the event of unforeseen circumstances such as death, retrenchment, unemployment, inability to earn an income, disability and others. In the event of the consumer becoming unemployed or unable to earn an income, the credit life insurance cover provides that credit providers must settle/pay the consumer’s debt for a period of 12 months or for the remaining repayment period or until the consumer finds employment or is able to earn an income, whichever period is shorter.
“However, it is important for consumers to remember that in order to benefit from credit life insurance, all payments regarding the credit life insurance policy must be up to date,” said Legodi.
Surrender of goods
The NCA allows consumers to voluntarily surrender / return goods to credit providers when they can no longer afford to maintain the repayments or can foresee that they will not be able to maintain future payments. In terms of the act, credit agreements under which goods can be surrendered are instalment agreements, secured loans or leases. Legodi said there is a complex process to be followed, which consumers are encouraged to understand before they give notice to a credit provider to return the goods.
The credit provider is required to provide the consumer with a letter setting out the estimated value of the goods, 10 business days after the consumer gave notice to surrender or return the goods, whichever is the latest. The consumer may withdraw the notice to surrender within 10 business days after receiving the estimated value letter, if the account is not in arrears. The credit provider will sell the returned goods in an attempt to settle the debt.
“However, there is no guarantee that the credit provider will sell the goods for what the consumer still owes. If the proceeds from the sale are insufficient to settle the outstanding debt, the consumer will be liable to pay the shortfall after the sale.”
Loans
For consumers with a need to borrow or loan money, they should do so having considered their ability to repay the debt. “Consumers should never enter into any agreement with unregistered credit providers who usually retain bank cards, SASSA cards, identity documents etc. as security and a collection method.” The retention of cards or identity documents is prohibited and a criminal offence in terms of the NCA.
The NCR is also mandated with the registration of credit providers, credit bureaus, debt counsellors, payment distribution agents, and alternative dispute resolution agents.
However, loans have the potential to land consumers in more trouble with regards to debt. A loan may address the symptoms of financial distress, but the root of the cause must be identified and rectified. Whether that is bad financial planning, the lack of a budget, impulse purchasing or living above ones means.
If you have suffered financial losses due to COVID-19 and other factors reach out to DebtCare. A qualified debt counsellor will be assigned to you to asses and work through your current financial situation and to recommend the best option to ensure you start the process of becoming debt free without harming your credit score.
Email wecare@debtcare.co.za or call 0861 977 873.
