NCR Certification in terms of Section 25 of the National Credit Act


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Debt Mediation

Over indebted consumers who find that a 40% reduction of their monthly creditors installments, as administered in terms of the Fix It product, are not a viable proposition, due to such reduction not causing for them to have sufficient means to provide for their and or their dependents necessary day to day expenses, could appoint Accord Debt Solutions CC to administer offers to creditors structured on consumers actual affordability.

The Credit Industry Code of Conduct to Combat Over-Indebtedness in terms of

Section 48(1) (b) of the National Credit Act(NCA), entered into by all credit providers that provide services as set out in the National Credit Act, provide for the following in Section 1.4 of the Code of Conduct:

"1.4. We recognise that consumers should not be provided with credit unless they are able to afford the credit for which they have applied. We recognise that where possible, over-indebted consumers should preferably obtain relief through consensual arrangements with their credit providers matched by reciprocal commitments from their side with the aim to allow them to recover from their financial difficulties. The achievement of both of these aims constitutes the primary objectives of this Code."

Over indebted consumers have the right to be assisted by their creditors to recover from their financial difficulties.

Creditors and or their collecting agents and or their legal representatives have to assist over-indebted consumers to preferably obtain relief through consensual arrangements matched by reciprocal commitments from their side, with the aim to allow them to recover from financial difficulties.

Consensual include undisputed action from creditors. Should creditors not cooperate in a sympathetic and understood manner regarding consumers over-indebted situations, then they will be in conflict and or controversy due to one-sided demands for payments of un-affordable instalments.

Consumers then have a right to refer such matters to Debt Dispute Resolution.

Creditors who do not comply with the provisions of the mentioned Code of Conduct will be reported to the National Consumer Tribunal (NCT) for prohibited conduct in terms of Section 150 of the National Credit Act, that read as follows:

"150. In addition to its other powers in terms of this Act, the Tribunal may make an appropriate order in relation to prohibited conduct or required conduct in terms of this Act, including-

a) declaring conduct to be prohibited in terms of this Act;

b) interdicting any prohibited conduct;"

Such a dispute and or cases reported to the NCT will restrict the court from considering legal claims from creditors in terms of Section 130 (3) (b) and © (i) of the National Credit Act.

All creditors that claim instalments in terms of credit agreements, to which the National Credit Act apply, have to provide for debt re-organisation in cases of over-indebtedness.

Debt Mediation services have been provided by Accord Debt Solutions CC since 2002, before the National Credit Act and or debt review came into being and has since caused for many consumers being assisted with over-indebtedness.

Debt Mediation is a product created in support of over indebted consumers and not a product created to only benefit creditors in terms of creditors demands.

It is not inevitable that all debt must be restructured in such a way that all creditors are satisfied with the new payment terms, due to Debt Mediation not solely benefiting creditors.

Un-affordable debt payments must be restructured in terms of consumers affordability and not in terms of creditors claims.

Debt Mediations purpose is to assist consumers to have sufficient means to pay towards their and their dependents necessary day to day expenses, while having affordable payments effected to creditors with the intention of having ones debt settled over the shortest possible time,while utilizing all possible options to do so available in the financial marketplace.

This done, without being restricted to take up emergency loans, available consolidation finance and or further advances on existing home loans, when such finance become available to persons with such over indebted circumstances.

In 2013 the department of Trade and Industry compiled a Draft National Credit Act Policy Review Framework where it was found that:

" Statistical evidence shows that, whilst a large number of consumers are over-indebted and many apply for debt counselling, very few consumers actually go through the process"

" The logical conclusion therefore is that debt counselling is working, but only for a limited few"

" Remedies such as administration and debt review do not offer the same manner of relief. In some instances it can be argued that such remedies actually burden the consumer further- given that little apparent caution or care is taken in limiting the collection and other legal fees which subsequently become for the account of the consumer in these cases."

" It is, therefore submitted that Government should investigate the development of alternative or additional debt relief measures to assist those over-indebted consumers for which debt review is not a viable option"

This Debt Mediation assistance rendered by Accord Debt Solutions CC is a viable option for those over-indebted consumers who do not want to go under Debt Review.

Consumers making use of Debt Mediation are not limited to Debt Mediation services and may cancel the service at any time, unlike with debt review where a court order restrict consumers from doing so.

Consumers could also consider Sequestration after having identified creditors claims as legally claimable, through Accord Debt Solutions CC debt mediation services, where they want to only pay part of their outstanding debt.

Certain consumers are misled to understand that Debt Review allow for only part of creditors claims to be paid. This is not the case, if the court order does not specifically note it.

Consumers should read the application for Debt Review court order and assure themselves that the Debt Review court order do not provide for the creditors right to claim in terms of the agreements entered into, prior to instructing a debt counsellor to proceed with the process.

Consumers should also be aware of Debt Counsellors offering such services as the National Credit Regulator restrict Debt Counsellors from rendering such service as set out in a recent publication by the National Credit Regulator.

In November 2014, the NCR distributed a circular to all Debt Counsellors.

"4. Credit providers, debt counsellors, credit bureaus and payment distribution agents are requested not to participate in discussions to introduce voluntary debt mediation. In particular, credit providers must continue using statutory debt counselling and allow all consumers to use statutory debt counselling."

During the Debt Management process consumers are assisted with credit education that is not only provision of information and or addressing the informational imbalance between consumers and credit providers. It is an educational process constantly improving consumers understanding of their legal rights regarding their over indebted situation.

Especially to those consumers that lacks literacy and or numeracy and or financial literacy skills.

Under Debt Mediation and Debt Management, once consumers are satisfied that they are able to proceed to manage their financial affairs with their creditors on their own, they immediately do so.

When under Debt Review, where a court order is in place, consumers remain under debt review until the total outstanding debt is settled in terms of the creditors agreements entered into. Consumers should revert to the court order to establish whether it provide for special conditions relating to creditors claims.

To apply for further advise on the Debt Mediation and Debt Management product, register or log in above and one of our trained intermediaries will contact you within three working days.