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Why use Debt Counselling?

"Debt Counselling was formally introduced by the National Credit Act to help over-indebted consumers, especially in our current economic crisis. The goal of Debt Counselling is to develop a repayment plan which is affordable to you, as well as acceptable to all your credit providers. It is there to help you, so why not make use of it?"

How long will it take before I actually experience relief?

"You will immediately experience the relief that Debt Review offers. Within the first 5 days, we will work out a provisional repayment plan for you which you will be able to afford. In terms of the provisional repayment plan, you will make a single payment to a Payment Distribution Agency, who will distribute the money according to your plan. During the first 60 working days, your Credit Providers will not be allowed to implement action against you. During this time we will prepare your final repayment plan."

Will I have to engage in a consultation in person at the offices of AE?

"No, the whole process can be finalized telephonically and by e-mail, no matter where you stay in South Africa."

How does AE manage to lower my payments?

"In terms of the National Credit Act we, as Debt Counsellors, are allowed to lower your monthly payments by extending your repayment periods and in some cases by lowering your current interest rate. "

What if Debt Counselling is not the ideal situation for my circumstances?

Should we believe that Debt Counselling is not the best option in your particular circumstances, we will refer you to one of our preferred service providers to assist you with the most appropriate process, whether it is sequestration or perhaps selling your property.

Which debts are excluded from debt review?

Service accounts cannot be included under debt review. This means that cell phone contracts, child support, water and electricity, RENT, DSTV contracts, and school fees cannot be included under debt review.

I have heard some negative rumours about Debt Counselling. Does Debt Counselling really work?

Debt Counselling evolved a great deal since it was launched in June 2007 by the National Credit Act. As is the case with the implementation of almost all new legislation, all the grey areas in the Act had to be found and tested in court in order to have the Act run smoothly. We are convinced that the industry has already reached the point where Debt Counselling is now running the way it was intended to by the legislator. We have successfully helped thousands of people since the inception of Debt Counselling back in 2007 and we are happy to see that more and more people are realizing that the system is working. So the answer is yes, Debt Counselling does work. In some isolated cases there were some bad apples in the industry in the form of Debt Counsellors who were in it for a quick buck. Most of these bad apples have since been worked out of the system, ensuring a dependable industry that is helping thousands of South Africans to deal with their financial distress. South Africa has managed to bring Debt Counselling to a point where it is regarded as one of the most successful of its sort in the world. It is imperative that you choose the correct Debt Counsellor though, as we are of the opinion that there are still certain Debt Counsellors in the industry who do not possess the necessary skills, competence and experience to offer you the full benefits that Debt Counselling can offer.

What happens if my Credit Providers do not accept my Debt Review?

If we feel that your offer towards your Credit Providers is reasonable, then we will endeavour to convince the court that the Debt Review must be made an order of court, even if your Credit Providers do not agree. If your Credit Providers take action against you in these circumstances, then the monthly payments that should go towards those particular Credit Providers may in certain circumstances be used to defend such actions. At the end of the day the Credit Providers just want their money, so should your repayment plan be reasonable, it is very unlikely that the Credit Providers will not accept it.

If I am placed under Debt Review, will my Credit Providers still contact me?

"As soon as you apply for Debt Review at AE, we will within 5 days (usually less than 48 hours) notify all your Credit Providers that you are under Debt Review and from that point onward they must, by law, communicate with your Debt Counsellor and not with you directly. It does unfortunately happen from time to time that some Credit Providers take a chance by making contact with our clients directly, but when that happens, you can merely refer them to your Debt Counsellor who will deal with the matter further. "

How would I know that I need Debt Counselling?

"The mere fact that you are reading this means that you will most probably benefit from Debt Counselling. The golden rule is not to wait too long before you contact us. The earlier you come to us, the easier it would be to find a solution for you. You can only benefit from contacting us."

Will I lose my house or my vehicle when I am placed under Debt Review?

Debt Review cannot make you lose your home or your vehicle. It can however save your home and vehicle, but this will obviously depend on your unique circumstances. Factors that will determine this will include the following:

  • Have you received a Section 129 letter from your Credit Provider, and if so, how long ago? If you receive a Section 129 letter from your Credit Provider, you will have 10 working days in which you can obtain the services of a Debt Counsellor, who will endeavour to save the asset.
  • Have you been served with a summons in respect of your mortgage bond or vehicle finance?
  • How many vehicles do you have and what are they used for? Quad bikes and Jet ski’s will for example be regarded as luxury vehicles and might have to be returned to the bank.
  • Are you giving your full cooperation in the program?

The bottom-line remains that you will always be in a better position to keep your home and your vehicle when you are under Debt Review, rather than trying to fight off the banks yourself.

How long will I remain under Debt Review?

It is different for everybody, as every individual’s situation is unique. In order to lower your monthly instalments, we have to extend your repayment periods. In some cases we manage to convince Credit Providers to also lower their interest rates, which means that your repayment period will not be stretched too much. Your debt repayment plan will indicate exactly when your last day of payment will be. If you however manage to get a substantial salary raise or inherit a lump some money for instance and you are in a position to pay off all your debt or make a better payment arrangement with your Credit Providers, you can contact us and we will end your Debt Review on your instruction and inform the Credit Bureaux to remove the Debt Review flag behind your name.

What are the costs involved with being placed under Debt Review?

"Our fees are regulated by the National Credit Regulator and are very reasonable, as the idea is to get you out of debt. The fees will be explained to you in detail once you contact us. The important thing to remember here is that our fees and disbursements are included in your affordable debt repayment plan."

Would I have to appear in court in order to make my Debt Review an order of court?

No, you do not have to appear in Court, as your Debt Counsellor will be the applicant and you will merely be a respondent. As soon as our attorneys notify us of the outcome, we will immediately notify you of same. In the unlikely event that the magistrate does request your presence, it would merely be to establish certain facts. You will not be questioned by any attorneys or anything like that, as this would merely be a court application and not an action procedure.

Will my employer know that I am under Debt Review?

No. We never contact clients at work unless asked to do so.

Can I be “blacklisted” by Credit Providers whilst I am under Debt Review?

"No, whilst you are under Debt Review, your Credit Providers will not be in a position to “blacklist” you. If the “blacklisting” took place before you applied for Debt Review, it will however reflect on your credit record. This is a further reason why you should rather apply earlier than later for Debt Review."

Can I apply for Debt Review if I am unemployed?

"In order to be placed under Debt Review, you have to have a monthly income that puts you in a position to make a reasonable offer to your Credit Providers. If you are therefore unemployed and you do not receive any other income, like rental income or pension, Debt Review is not the ideal solution for you. There are other solutions available that might be beneficial for you, so you can still contact us."

I’ve been summoned to court, can AE still help me?

"You can still contact us. There might be other means of assisting you. The sooner you contact us, the better our changes are for finding a workable solution for you."

What if I already have judgments against me?

"You can still contact us. There might be other means of assisting you. The sooner you contact us, the better our chances are for finding a workable solution for you."

Can I apply for more credit or use my credit cards while I am under Debt Review?

"No. The idea is to get you debt free and therefore you will not be allowed to incur further debt whilst you are under Debt Review. Once your obligations towards your Credit Providers have been satisfied, we will issue you with a clearance certificate and you will be in a position to apply for credit again."

How will Debt Review influence my credit record and will I be able to apply for credit again in the future?

Whilst you are under Debt Review, a flag indicating that you are under Debt Review will be present behind your name at the Credit Bureaux. Once you have satisfied your debt obligations, we will instruct the Credit Bureaux to remove the flag and there will be no indication that you have ever been under Debt Review. If you however do not apply for Debt Review, the situation is much worse. If you skip monthly instalments on any of your Credit Agreements, whether it is a Mortgage Bond or a mere clothing account, this will be listed as non payments. For purposes of obtaining credit in the future when you are back on your feet again, it would therefore be an obvious choice to rather opt for Debt Review than to try and juggle your Credit Providers by paying them less than your original instalment or not paying all of them timeously.

What happens if I get retrenched whilst under Debt Review?

"Unfortunately this would be a big problem with regards to your Debt Review, as you must make your monthly payments in respect of your debt repayment plan. Should this happen and you do not immediately get another income to satisfy your monthly instalment in terms of your debt repayment plan, you must contact us immediately, so that we can look at an alternative solution for you."

What happens if I get into an accident for example and I cannot pay my monthly Debt Review instalment?

"The determining factor will be reasonableness. If you can prove that you were not in a position to pay, because you were in hospital for instance, we can send a certain notification to the Credit Providers and in all probability it will be accepted and your Debt Review will continue. It is very important to note that Debt Review does not provide payment holidays. Debt Review should never be abused in order to evade your obligations."

Will Debt Review have a negative impact when you apply for another job in the future?

"No, it should not have a negative impact, because if a new employer does a credit check on you and picks up that you are under Debt Review at the time, it will in our opinion obtain you respect, as the employer will realize that you did the responsible thing when you started to experience financial problems. The alternative would be much worse. If the employer picks up that you have defaults on your credit record and you did nothing about it, it would not send a good message at all."

Will my insurance policies be affected by Debt Review?

"No, as long as you are not paying too much, we will refer you to FSB accredited broker for a financial analysis. Provision is made in your debt repayment plan for all your insurance policies. In fact, if you have vehicle finance, you will be compelled to have insurance on the vehicle."

Does AE provide consolidation loans?

"Not at all. Our goal is to get our clients debt free. Further loans will definitely not solve your financial problems"

What is the difference between Debt Counselling, administration and liquidation?

*Debt Counselling: is where a Debt Counsellor restructures instalments to allow the consumer to pay his or her debt and meet his / her basic living expenses. Debts are paid monthly.

*Administration: is a legal process, where the instalments are reduced, but creditors only receive payment every three months and the term of repayment is much longer than under Debt Counselling. Debt must be less than R50 000 to qualify.

* Liquidation: is a legal process where assets are sold to try and lessen the debt and the Court will appoint somebody to manage your finances. This is costly and you will be blacklisted for 30 years or until the Court declares you as rehabilitated.

What is the difference in the case of Sequestration / Judgement?

Sequestration

• There are costs associated with sequestration and your creditors will have to pay them out of your insolvent estate;

• It allows you to write off some of your debt or most of it;

• You lose all your assets;

• It is highly unlikely that you will be able to get credit again without the approval of the trustee (the person appointed by the court to manage your assets);

• You will have to apply to be rehabilitated later, which is not that easy. Usually not before 4 years have elapsed. This means that during the 4 years you cannot qualify for a loan or enter into any credit or financial agreements. Even once you have been rehabilitated you will battle to get credit for another 5 years as the notice of rehabilitation which gets added to your credit record will discourage creditors from lending to you even though they are now allowed to;

• You must first persuade your creditors that sequestration is the best option for them too. Because they pay something towards the costs, they can refuse to do this and then you have to go for the second option.

Judgement

If you are unable to pay your debt and you do nothing, it is very likely that your creditors will take judgment against you. The effect of this could include the following:

• They can attach your assets;

• They can demand a portion of your monthly salary or garnishee order;

• You are listed on the credit bureau;

• The judgment stays in place for 30 years. This means that your creditor has 30 years to collect the debt from you.