Burn that excess Debt! It's time to detox and declutter.

January 2021, a month like no other. The new year customarily comes with resolutions; weight loss, spiritual and mental health goals. It does, however, seem as though 2021 has prompted us to deviate slightly from this as the topmost goal is now to focus on being appreciative of our true 'assets' - our loved ones.

While we are humbly appreciative of our 'assets', in the spirit of detoxing and decluttering for the new year, we must understand that excess debt which we may have accumulated does not go away. Discipline is required to give effect to the detox and declutter and, ultimately to get rid of all the excess debt. In this way, you are in control of your debt as opposed to being controlled by debt.

The Credit Ombud appeals to consumers to use January to detox and declutter debt and to consider the following:

Only apply for credit when the need arises and not for 'wants'. If you have a need for credit, consider your affordability. Conduct an affordability calculation of your income and expenses.
Be self-disciplined and create a monthly budget. Your budget allows you to have a clear perspective of what is your income against your expenses. It can also help to understand your spending patterns and how you may adjust these to reach your goals.
Prioritize your spending. Now is the perfect time to re-look at your spending habits and make changes. If you have been fortunate to still have an income, spend less on luxuries and add a little extra towards your debt repayments.
Remember that credit comes with interest and other additional costs accruing. You should consider these additional costs when applying for credit.
Buying on credit should be for 'big-item purchases', like a home. If you have been prudent to budget for an item, pay cash or purchase through lay-bye.

Clutter overwhelms - you do not know where to start to tidy up. A routine way to declutter would be by putting items in order systematically; then deciding whether you want to keep, throw away or donate the items. If you cannot manage to declutter on your own, you call the professionals to help. The aim is to pay off existing debt and not take-on further debt. To do this, we must commit to:

Fulfilling commitments on financial contracts entered into by ensuring accounts are paid on time, without skipping payments;
Reduce expenses;
Do not avoid credit providers looking for payment on outstanding debt due to unforeseen circumstances. Make alternative arrangements with credit providers to pay back what is due.
In the event that debt is overwhelming, there are options like debt counselling, debt consolidation and administration to assist in decluttering the debt cycle.
Be determined to save. By 'cleaning up' debt, there is an opportunity to save.
A credit report assists to ensure that no fraudulent actions have led to adverse credit information appearing on the report and is one of the tools that credit providers use to decide whether credit may be advanced. Contact the credit bureaux for a FREE credit report: every twelve months.

The process isn't an easy one, however, once all the toxins are gone and there's no clutter, we can have a clean start. With financial knowledge acquired while detoxing and decluttering our debt, we will make wiser financial decisions.

Consumers can contact the office of the Credit Ombud for FREE assistance if they experience any issues relating to credit agreements with non-bank credit providers such as the clothing and furniture retailers as well as micro-lenders, fraudulent listings, emolument attachment orders ("garnishee orders") or general complaints about their credit bureaux listings. The office can be contacted on 0861 66 28 37; on the website www.creditombud.org.za; email us at ombud@creditombud.org.za or send a SMS to 44786 and we will call you.

NCR Circular on Standardised Court Orders

Towards the end of 2020, after deliberations with various related stakeholders, the NCR issued a circular developed by the CIF with proposed operational solutions to standardize debt review court orders. It further addresses the inability of debt counsellors to comply with the 2012 Regulations due to delays by the courts to make the granted court orders available within 5 working days.

The following must be included in a debt review court order:

General inclusions:
- The jurisdiction
- Case Number
- Name, surname and NCRDC number of the debt counsellor
- Name, surname and ID number of the consumer/s
- Name and NCRCP number of the credit providers
- Credit agreement details (type and account number)
- Clauses in the Order should align with the prayers in the notice of motion
- A clause confirming the consumer/s to be over-indebted
- When the Order refers to annexures, all annexures to be clearly marked and attached to the order.
Payment related inclusions in the court order:
- A copy of the debt re-arrangement proposal
- Estimated starting date of payment
- A clause confirming that the distribution is subject to the principle of cascading repayments.
- The final debt re-arrangement proposal acceptance letters of the credit providers.

The circular goes further to address general exclusions from court orders. The Circular refers to 2 clauses that should be excluded and not be referred to in the court order. They are:

A clause referring to a PDA because a PDA is not a party to the court order
A clause referring to the appointment of the debt counselor because a debt counsellor is subject to change. This is simply to avoid variation applications when a consumer is transferred or a debt counsellor is deregistered, dies or their registration has since lapsed

The final part of the circular remedies the inability of debt counsellor to comply with the 2012 Regulations due to courts not providing the court order within 5 working days.

The following working days have been extended:

Regulation 2(3) and Regulation 3(3)
The debt counsellor must collect a copy of the court order from the clerk of the court and deliver it within 15 working days from the date of issue to the affected consumer and each credit provider.

Should you require a copy of the Regulations, please don’t hesitate to let us know.

Industry Ready to Commence After Festive Season

Whilst most of the bigger debt counsellors remained open with skeleton staff during the festive season, all debt counsellors are due to return to work between the 1st and 2nd week of January 2021.

The courts are due to open the 2nd week of January 2021.

UPDATE: 08 January 2021

Towards the end of January 2021, the NCR issued a circular wherein they authorised the transfer of several consumers from debt counsellors who have been deregistered or whose registration has lapsed.

They provided the details of the debt counsellors to whom the consumer will be transferred. Whilst the circular stated that we will be contacted by the new debt counsellors to facilitate the transfer, we have proceeded to get in touch with the new debt counsellors to obtain a list of the affected consumers.

Once we have these details, we will proceed with the transfer on our system.