Are you currently struggling to cope with your debt?

Novation Financial Services provides a service that includes both Debt Counselling, as well as legal assistance, which will ascertain fast and effective service that will assist you in successfully managing your debt.

What is debt counselling?

Debt counselling is a debt rehabilitation programme introduced by the National Credit Act that came into effect in June 2007. This will protect the over-indebted consumer from aggressive creditors who are quick to take legal action. You, as the consumer, will benefit from debt counselling by paying more manageable monthly instalments and the creditor benefits from not having to take expensive legal actions or to write off bad debt.

After you, the consumer, successfully applied for Debt Review and the Debt Counsellor has notified the Credit Providers, you will be under Debt Review and a letter to this effect will be issued upon you by your Debt Counsellor.

Why use Debt Counselling?

Debt Counselling is a highly effective solution for people with serious debt problems. Debt Counselling will make it possible for you as consumer to make reasonable payments towards your debt, to take control of your finances again and emerge debt free after a period of time.

How does one qualify for Debt Review?

For you as consumer to qualify for Debt Review, you require the assistance of a registered Debt Counsellor. This Debt Counsellor reviews your finances and then establishes whether you are over-indebted or not. Over-indebted is defined as follows in the National Credit Act: "if taking all financial circumstances into consideration a client is deemed to be unable to repay their debts".

Checklist to determine whether you will qualify:

  1. You earn a monthly income. (Employed or Self-employed)

  2. After paying ESSENTIAL living expenses (for example rent, transport, food etc), you have money left (before debt payments have been made).

Money remaining after these expenses will go towards the creditors’ payments each month to suit your budget.

Which debt can be included in the Debt Counselling application?

  1. Secured Debt:

    1. Property finance

    2. Vehicle finance, (etc)

Take note this debt can ONLY be included where no judgement has been obtained or no Section 129 (Letter of Demand) Notices has been issued.

(It is still possible to consult a Debt Counsellor if you have received a Section 129 Notice, but this needs to be done as soon as possible then. The Debt Counsellor can make arrangements with the Credit Providers, but if a court judgement has been taken they cannot include this debt under the Debt Review Process.)

  1. Unsecured Debt:

    1. Credit cards

    2. Store cards

    3. Personal loans, (etc)

 

Difference between Debt Counselling, Administration and Liquidation:


DEBT COUNSELLING

ADMINISTRATION

LIQUIDATION

To qualify for Debt Counselling you have to be declared over-indebted.

A repayment plan is developed by the Debt Counsellor that is affordable for you as consumer and acceptable to the Credit Providers.

To qualify for Administration, your debt has to be less than

R50 000.

This is a legal process where your instalments are reduced, you pay the Credit Providers every three months and the repayment term is much longer.

If under Administration, you can’t apply for Debt Counselling.

 

This is a costly legal process where the Court appoints a third person to manage your finances. Your assets are also sold to try and lessen your debt.

You would be blacklisted for at least 10 years or until the Court declared you as rehabilitated.

 

 

Is Debt Review a payment holiday?

 

Debt review is under no circumstances a payment holiday. It is important to take note that you are still under the obligation to make monthly payments from the first month you apply. As soon as you fail to make you monthly payments, you are in default and the Credit Provider and/or the Debt Counsellor may terminate your Debt Review Process. Once under Debt Review you no longer pay your Credit Providers directly, a Payment Distribution Agency distributes the agreed monthly repayments to all your Credit Providers. It is also important to take note that you can’t apply for credit or use any accounts and other credit facilities while under Debt Review, this will only be possible after a clearance certificate is issued by your Debt Counsellor.

You can read more about the National Credit Regulator (NCR) at http://www.ncr.org.za/

For more information about the National Credit Act, visit http://www.ncr.org.za/the act.html

REMEMBER: It is crucial to take action before it is too late. As soon as you receive a summons it is out of our hands and therefore the creditor has no obligation to listen to the Debt Counsellors.