Rid yourself of financial woes

Outstanding debt is easier to sweep under the carpet than to deal with. Initially, you might find some solace in pretending, however, as time progresses, that bulge under the carpet will eventually become stress bulges that run down your neck and keep you up at night. Eventually the sound of a phone ringing will bring about anxiety, as it could possibly be one of your creditors following up or threatening to take legal action against you. That’s not even the worst of it all. The worst phase to enter is the one where you simply lose hope.

“Hope is like the sun, which, as we journey toward it, casts the shadow of our burden behind us.” Samuel Smiles

If you are having serious trouble repaying your debts and if you are ready to embark on the road to financial freedom, we at Legal Hero have the perfect solution: debt review. We do not offer this service personally, but have truly been inspired by Karin Augustyn from Cape Debt Clinic and her team to whom we refer all our financially distressed enquiries. Karin and her team’s compassion is beyond anything we have ever experienced in the overpopulated debt review industry. *

Debt review vs being placed under administration?

Debt review is often preferred to being placed under administration. Why?

Debt review offers greater consumer protection as the fees to the debt counsellor are strictly regulated by the National Credit Regulator. A debt counsellor will assess your state of indebtedness, offer sound financial advice and facilitate a debt rearrangement with your creditors. Should your creditors not agree to the debt rearrangement one may apply to court for an order confirming same. The debt counsellor will then manage all your payments from a central distribution agency on a monthly basis on your behalf.

Administration is more expensive and the fees to the administrator managing the payments are higher. A court order is required and the debt may not total more than R50 000. There have been many reports of irregularities in that the fees to the administrator are not properly regulated and there is no central distribution agency involved. In most cases the distributions to credit providers only occur every three months and are handled by the administrators themselves.

How long does debt review take?

Nothing is a short-term fix. You will need to commit. The goal is to get you debt-free within a period of 3-5 years. Depending on your circumstances, this could happen much sooner. For a detailed timeline elaborating on what happens from day 1 – the day of your financial freedom, visit this link:

http://www.capedebtclinic.co.za/Debt_Review_timeline.html

Visit this link for answers to other frequently asked questions regarding debt review:

http://www.capedebtclinic.co.za/Debt_Review_FAQ.html

Contact Cape Debt Clinic (not limited to the Western Cape) on 021 828 2658 for a free first consultation to assess your needs.



* Please note that Legal Hero does not receive commission/ referral fees for referrals to Cape Debt Clinic.

How do I clear listings from my credit report?

Here at Head Office we all do some credit ‘spring cleaning’ right after the annual budget speech. Everybody requests a copy of his/ her credit record from TransUnion/ Experian and then scrutinizes the document in order to avoid any nasty surprises. 

Did you know that potential creditors are obliged to check your credit record for any listings prior to approving your loan? A listing could then lead to the rejection of your application.

Ranked from least to most serious, there is a chance that you might spot one or more of the following listings on your credit record: payment profile information, adverse information, judgments and notices.

Payment Profile Information:

What is it? This listing changes every month, dependent on whether or not you paid your clothing/ other accounts. When you skip a payment, this gets listed on your credit record.

How do I remove it? There is nothing you can do to remove this type of listing.

Will it affect my loan application? It is definitely something your potential creditor will take into account when considering your application. However, in most cases you will be granted credit.

Adverse Information:

What is it? After skipping a few of the abovementioned payments or not paying on time, your creditor will notify the credit bureau and have you tagged as a ‘slow payer,’ ‘default,’ ‘write off,’ etc.

How do I remove it? The only way to remove this type of listing is to write to your creditor with reasons as to why your account was in arrears AND make payment to get your account up to date. Examples of reasons include hospitalization or retrenchment – please remember to attach proof of payment as well as proof of your reason. It is then up to your creditor to decide whether or not it will write to the bureau to remove the listing.

Will it affect my loan application? Although you will be granted credit in most cases, it may come at a higher cost to you.

Impact of the Removal of Adverse Consumer Information and Information Relating to Paid Up Judgements Regulations, 2014? Some data on your credit record (adverse information reflecting on 1 April 2014) was ordered to be removed. This does not mean that you no longer owe the outstanding amounts to your creditor. What is does mean is that future creditors will no longer see old adverse information data as available on 1 April 2014 when considering your credit application.

Judgements:

What is it? After skipping many payments, ignoring calls from your creditor, receiving letters of demand, summonses, your creditor will apply to court to confirm the amount owing plus interest, legal fees, etc.

Whereas a debt prescribes (expires) within three years since the date of your last payment or acknowledgement of the debt, a court order confirming a debt only prescribes after thirty years. This means your creditor has thirty years to enforce the debt.

For more information on judgements and emolument attachment orders (garnishees), please visit this link: http://www.legalherolearn.blogspot.co.za/2015/07/emolument-attachment-orders-in-south.html

How do I remove it? Previously you had to:

i. Pay the debt in full;

ii. Obtain a confirmation letter from the creditor;

iii. Apply to the same court for the rescission of the judgement. This was a costly exercise;

iv. Obtain a copy of the court order confirming the rescission;

v. Send the court order confirming the rescission to the credit bureau and request the judgement’s removal from your credit record.

Effective 1 June 2014, the creditor has an obligation to send confirmation of a paid up debt to the credit bureaus within 7 days. The bureaus (Transunion/ Experian) will then remove the listing within 7 days. You may also contact the bureau and submit the confirmation letter to arrange the removal if you wish to do so.

Will it affect my loan application? Yes. Having a judgment against your name will most likely lead to the rejection of your credit application.

Notices:

What is it? This is the most serious type and happens after you have been sequestrated or placed under administration.

How is it removed? You need to apply to court.

Will it affect my loan application? Yes. Creditors will not grant you credit and might even be held liable for acting recklessly should they do so.



We hope you found this post helpful. If you are a Legal Hero Policyholder, kindly contact our offices for assistance with your credit record.

Debts have expiry dates too

Similar to the sell by dates found on your milk carton, debts have expiry dates too! This is for legal certainty and to protect debtors against old and inflated debts.

A creditor only has 3 years’ time to institute legal action against a debtor (since the last date of payment/ acknowledgment of debt). After the 3 year period the debtor may raise the special defence of prescription in court.

To avoid the debt’s ‘expiry date’ the creditor needs to:
a) convince the debtor to acknowledge the debt or make a payment towards the debt (this will cause the 3 year period to start running afresh) OR
b) take the matter to court before the ‘expiry date’ to request a judgment against the debtor (as a judgment debt is binding/ lasts for 30 years!).

We often see creditors take advantage of the debtor’s ignorance and demand immediate payment when in actual fact the debtor is able to raise the special defence of prescription in court. Technically only a court can confirm your special defence of prescription, however, most creditors will stop calling/ sending legal letters once you have correctly pointed out prescription. Should the creditors still decide to take you to court, remember to ask for a cost order against them (meaning that they should be held liable for your legal fees should your defence succeed).

Very important is that the defence of prescription is not something the magistrate/judge will bring up in court on behalf of the debtor. If you are unaware of this special defence, chances are you will end up with a court judgment against your name.

Please note that debts owed to the State in terms of taxation and/or levies are different and only prescribe in 30 years’ time (without the State having to go to court to obtain judgment against you). This means that the State has a full 30 years to claim from you debts resulting from municipal bills, TV licences and traffic fines.

Knowledge is power.  

Legal Hero.

www.legalhero.co.za

Legal Hero endeavours to not only provide quality legal assistance at an affordable monthly premium, but also legal education, so that everyone, in time, may become their own hero.