Can you cancel debt review?

Lucky asks: I would like to know if it is possible to deregister from debt-review?

I would like to make payment arrangements with the debtors as I’m now financially stable. I’ve been promoted and I don’t think debt-review is necessary anymore.

Are there any penalties I must expect from the debt counsellor if I need to deregister, even though I make regular payments?

My original balance of all my debts was around R15 000.
In 2009 I applied for debt review and I signed to pay R1 000 monthly. Suddenly my new balance is R75 890.

Maya replies: Paul Slot of debt counselling company Octogen says that in terms of the National Credit Act, a consumer can only “withdraw” from the debt review if all the debt has been repaid.

When this happens the debt counsellor will issue a clearance certificate.

However this is not practical in all circumstances. So consumers are allowed to “withdraw” from the debt review if no court order has been obtained. So it is important to find out if a court order was obtained by the debt counsellor when you first went into debt review.

In other words, did your creditors require a court order or did they agree to debt review in the first place?

When you withdraw, the debt counsellor is obliged to notify all credit providers—and provided a 60 day period has elapsed since the application and the matter in no longer in front of a court—then the credit provider could proceed with legal enforcement.

If all payments are fully up to date however (all arrears payments have been paid) then the credit provider cannot or is unlikely to proceed with any legal action. If payments are not up to date then you run the risk of legal action by credit providers.

If a court order is in place for the debt review and payments are made in terms of the court order, then you can only “leave” the debt review if the court order is set aside. The exception is if the debt is repaid in full. Under these circumstances it is not advisable to withdraw from debt review.

Nothing is however stopping you from repaying more than required—this will result in a faster repayment.

In terms of the costs you mention, Slot says you should verify that the credit provider has loaded the terms and conditions as per the court order on their system. Very often this is not the case and additional cost and charges are loaded. This is not allowed.

You definitely need to find out what additional costs have been incurred and whether these are legal. Your debt counsellor should be fully aware of these.

In terms of Section 103(5) of the NCA, the total debt repayments (including cost, fees and interest), from point of default, cannot exceed double the amount outstanding. This is applicable on debt entered info after June 2007.

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