Is Debt Relief Plan Assistance/Court Mediation for me?
- Answer these questions to determine if Debt Relief or Court Mediation is for you:
- Are you in arrears and been served with a section 129 notice, letter of demand or summons AND you have not
- gone under debt counselling?
- Has your account been handed over to outside debt collection agents, including attorneys?
- Is your car or house in the process of being repossessed or auctioned with or without a court order?
- Do you have judgements or adverse listing that you want to settle and remove from your credit report?
- Do you have a dispute with your credit provider?
If you answered yes to any of the questions above you might need Debt Relief/Mediation Assistance. It can assist you to:
- Organise an affordable, realistic and structured monthly budget and debt repayment plan if you are in arrears to facilitate the stopping of any legal action that might lead to the creditor obtaining a judgment against you.
- By agreement, prevent the creditor from executing a court order (where your car or house is in the process of being repossessed OR auctioned) or proceeding with legal action by negotiating an acceptable repayment plan.
- Negotiate discounted settlements or reasonable repayment plan where you have a judgment or adverse listing and facilitate the updating of your credit bureau report.
- Resolve any dispute you have with your credit provider through mediation, conciliation or arbitration.
What is Alternative Dispute Resolution?
Section 129 of the National Credit Act allows a consumer who is in arrears to refer that credit agreement to a debt counsellor or Alternative Dispute Resolution Agent (ADR) to develop and agree on a plan to bring the payments under the agreement up to date OR resolve any dispute they have. Our CEO and one of our consultants are registered Debt Counsellors and we are also a Registered Alternative Dispute Resolution Agent. We are therefore legally empowered to assist you with a range of debt relief options.
With credit agreements that are regulated by the National Credit Act (NCA), the legal process usually commences with:
- A section 129 notice that credit providers are obliged to issue to you once you are in default for at least 20 business days.
- Once you have received a section 129 letter you have the option to refer that specific credit agreement to a debt counsellor, an Alternative Dispute Resolution Agent, Consumer Court or Ombud with jurisdiction. The intention is that the credit provider and you resolve any dispute related to the agreement or agree on a plan to bring the arrears up to date.
- If 10 business days elapse without you responding to the section 129 notice or if negotiations are not successful, the credit provider is at liberty to proceed to issue a Summons; and
- After summonses are served the court will issue a judgment against you if you defend the matter or a default judgment if you are not present in court;
- Once a judgment is issued the credit provider also obtains the right to repossess and sell any asset “ or Garnishee” your salary
Debt Relief/Mediation Assistance can be applied at any stage of the legal process as explained above, even where the credit provider has commenced with legal action OR has a court order but has not yet executed it. Instead of approaching a lawyer, you can approach the ICS to assist you with making payment arrangements OR resolving the dispute.
Protection from Legal Action for section 129 arrangements
In terms of section 130(3)(c) of the National Credit Act a credit provider cannot proceed with legal action under the following circumstances:
(a) When the matter is being considered by a Debt Counsellor, Alternative Dispute Resolution Agent, Consumer Court or Ombud with Jurisdiction or when the consumer has;
(i) Surrendered property to the credit provider and that property has not been sold yet;
(ii) The credit provider has agreed to a debt relief proposal made in terms of section 129(1) and the consumer is acting in good faith to fulfil that agreement;
(iii) The consumer has fully complied with the agreed debt relief plan; and
(iv) The consumer has brought the account up to date.
Benefits of a Debt Relief Plan (DRP)
It is important to note that the success and the outcome of negotiation of payment arrangementsare not guaranteed but we have achieved a success rate of above 80% in more than 5000 cases we have negotiated since 2010. The status of the account in terms of the arrears, the stage of collection or legal process, previous arrangements made and your historical payment behaviour will determine the outcome of the negotiations. It is therefore important to act early and avoid making any arrangements that you will not be able to honour or without first seeking expert advice. The benefits of making payment arrangements are:
- It is a process that does not involve the courts or lawyers thus saving you money;
- The stress of having to deal with your credit providers or their legal representatives on your own is reduced as we assists you through the process;
- You are protected from legal action as long as the credit provider has agreed to any new arrangement and you continue to pay according to the new terms or adhere to any agreement reached;
- You can exit the arrangement at any time when your circumstances change, without having to seek a court order;
- It will be noted on your credit bureau record that you have restructured your debts;
- If you pay off the debt all adverse listings regarding each of the accounts will be removed according to the guidelines of the National Credit Act but your repayment history will continue to show the payment patterns;
- You will receive support and guidance from us on how to manage your budget and sustain the new arrangement.
The Debt Relief/Mediation Assistance Process:
- The negotiations are sometimes conducted telephonically.
- You are required to make yourself available telephonically to participate in the negotiation/mediation process.
- We will facilitate the discussion between you and your credit providers and ensure that the process is fair and yield win win outcomes.
- Credit providers might want to speak to you directly to verify your identity and ensure that you understand the implications of the new arrangement or agreement.
Credit Provider Rights:
- The success and outcome of the negotiations is not guaranteed and depends on the history and the status of the account, the law and other related factors;
- Creditors can charge interest and fees up to the prescribed legal limit.
- The new arrangement will be cancelled if you do not honour the agreement and credit providers can continue with legal action.
- There are some instances where the credit providers will not make further concessions if concessions were already made or where the previous arrangements were not honoured.
- Each credit provider will apply its own restructuring or payment arrangement policy and the outcome of the negotiation will depend on the amount of arrears, the action already taken and previous repayment behaviour.
- The collections departments might still call you but as long as you have the new arrangement in writing you should be fine.
What is a Debt Relief Plan?
Where you are in arrears, have received a section 129 notice, summons or been handed over and you have opted not to go under debt counselling, the ICS will arrange a debt relief plan for you. It is a negotiated repayment plan for each credit agreement that is meant to allow you to catch up or manage arrears:
- It is a plan that allows you to meet your essential living expenses and manage your arrears according to your affordability.
- It is a plan for when you cannot afford to make the full contractual monthly payments on your debts due to a change in circumstances like divorce, retrenchment, maternity leave, illness and other unexpected expenses or events.
- It will not write off your debts but it will allow you to make negotiated reduced monthly payments.
- The plan is not court ordered and can be cancelled by you when your situation changes but as long as you keep to your restructured payments credit providers will normally not take legal action.
- You may still be contacted by your creditors if you use a third party like us to arrange a payment plan on your behalf. Do not agree to any arrangement without first consulting with us as it is important that any arrangement you make is within your prepared budget.
- You will continue paying your creditors directly on the agreed method which could either be a debit order or cash.
How does a Debt Relief Plan work?
- A revised budget will be prepared for you and discussed to ensure that it is reasonable and sustainable.
- The dispute will be investigated;
- We will, on your instruction and consent negotiate with credit providers or debt collectors on your behalf on those accounts that are in arrears or those that you anticipate you might find difficult to maintain the contractual instalments.
- Once there is acceptance from your credit providers the new payment plan will be implemented and you will receive confirmation of the new arrangement in writing.
The advantages of a Debt Relief Plan:
- You will avoid legal action, a judgment against your name as well as the loss of your assets or a “Garnishee” against your salary.
- No legal fees will be charged by us as this is not a process that requires going to court.
- We will support you during the negotiation process and once a plan is in place monitor your monthly payments to the credit providers.
Things to consider:
- It may be necessary for you to make lifestyle changes that involve reducing non-essential expenses and maintaining a strict budget in order to settle your debts quickly.
- Making regular payments on the agreed dates will ensure that no further action is taken against you.You are still responsible for your own debts;
- Proof of payment needs to be sent to us every month after making a payment.
- We strongly recommend that no new credit agreements should be entered into or additional debts incurred whilst on the plan as this will affect your affordability negatively.
- If your circumstances improve during the course of your plan you need to let us know and we will adjust your plan and inform your creditor(s) of the increased payments to follow. This will allow you to get your accounts in good order and improve your payment profile without delay.
- Do not use available credit on store or credit cards as this will increase your monthly repayment which the new budget will not include, placing you in a worse off situation.
The Debt Relief Assistance Fee:
The Assistance process which you applied for cannot be executed without the incurrence of certain costs as explained here below. Our fees are very reasonable and are aimed at ensuring that we cover our costs and you remain with enough money to pay off your debts as soon as possible. They exclude VAT which will be added once your Mediation fee has been agreed.
|Non refundable application fee.||R400 per application
R700 for joint applications
|Credit Bureau Report||Free||
|Once Off Mediation Fee||R3500 for normal payment arrangements for all affected credit agreements where there are arrears or section 129 has been issued.
Depending on your affordability and case circumstancesbetween R4000 and R6000for property and cars where summons has been issued, court order obtained or repossession or auction in process.
Court Annexed Mediation will be charged according to regulated tariffs set by the Department of Justice. The tariff is R600 per hour spent in mediation as well as for preparation. The tariffs allow additional charges for travel and report writing but the Mediator has the option to waive some of the fees.
|Cancellation Fee||Variable||Once the negotiations have commenced but not finalised and you wish to cancel or no longer continue any fee already paid is non-refundable. Where arrangements are already in place the full fee remains due and payable.|
|Monitoring and maintenance||R400 per new follow up||We will monitor your plan for three months after we resolve your matter without charge. Should you require us to assist you with any queries relating to the arrangements made after three months you need to pay us R400.|
How to pay for the service?
Payments can be made via:
- Electronic Funds Transfer (EFT)
- Direct Bank deposit (cash only as cheques need to clear)
Bank Account Details: First National Bank
Account Name: Ithuseng Credit Solutions PTY LTD
Account number: 62535232483
Branch name : Cresta
Branch number : 254-905
Type of account : Business Cheque Account
What to do next:
- Pay the Application Fee and send the proof of payment together with your application forms.
- Sign the “Acknowledgement of Payment Form and Consent Form” and the “Power of Attorney” attached hereto. We cannot proceed without these.
- Provide your mediator with all the required information when they call to discuss your case.
- Keep our information on hand:
Telephone: 011 326 3459