WITHDRAWAL
GUIDELINES
002/2015
GUIDELINES
FOR THE WITHDRAWAL FROM DEBT REVIEW
FEBRUARY 2015
INTRODUCTION
The National Credit Act (“the Act”)
introduced debt review as a debt relief measure for over-indebted
consumers. This is a statutory process
which is only conducted by registered debt counsellors.
The process to withdraw or terminate debt
review by the consumer or debt counsellor is not
specified in the Act; however the credit
industry has in the past years developed a voluntary
withdrawal process and a Form 17.4 to
facilitate the withdrawal process either by a consumer or DC.
The application of this voluntary
withdrawal process was overturned by the judgment granted
in the case of Rougier v Nedbank which
provided clarity on whether a debt counsellor has the
statutory power to withdraw or terminate
debt review. In terms of this judgment any act by
a debt counsellor to terminate or withdraw
debt review is beyond the statutory powers of a
debt counsellor as espoused in the Act,
therefore the conduct is prohibited.
Following an intensive review process of
this judgment and its impact by the Credit Industry
Forum(CIF), the NCR is pleased to announce
that the paper developed by the CIF has been
signed off and is issued as guidelines to
be applied by all industry participants effective immediately.
These guidelines replace the use of Form
17.4.
Please take note that amendments to the
Act, its regulations or case law supersede provisions made
in these guidelines and will when necessary
be amended.
COMPLIANCE
Credit Providers, Credit Bureaus and Debt
Counsellors are requested to comply by consistently
applying these guidelines. Non-compliance
with these guidelines should be reported to the NCR.
GUIDELINES
1. WHEN CAN A CONSUMER EXIT DEBT REVIEW
PROCESS?
• Section 71(2)(b)(i) of the Act initially
made provision for consumers to only exit debt review
through issuance of a clearance certificate
after they have paid all their re-arranged debts
in full. The effect of this provision is
that in instances where a home loan formed part of the
debt review application, consumers have to
remain under debt review for the duration of the
home loan term even after settling
re-arranged short term debts. This provision will however
change upon proclamation of the National
Credit Amendment Act (NCAA) under section 71(1)
as follows:
3 (1) A Consumer whose debts have been
re-arranged in terms of Part D of this Chapter must be issued
with a Clearance Certificate by a Debt
Counsellor within seven days after the Consumer has –
(a) Satisfied all the obligations under
every credit agreement that was subject to that debt
re-arrangement order or agreement in
accordance with that order or arrangement; or
(b) Demonstrated:
(i) financial ability to satisfy the future
obligations in terms of the re-arrangement order or
agreement under-
(aa)
a mortgage agreement which secures a credit agreement for the purchase
or improvement of
immovable property; or
(bb) any long term agreement as may be
prescribed;
(ii) that there are no arrears on the
re-arrangement contemplated in subparagraph (i);
and (iii) that all obligations under every
credit agreement included in the re-arrangement order or
agreement other than those contemplated in
subparagraph (i), have been settled in full.
2. CAN A DEBT COUNSELLOR TERMINATE OR
WITHDRAW DEBT REVIEW PROCESS?
• NO. A debt counsellor does not have
statutory powers to terminate or withdraw the debt review
process. This means that a debt counsellor
can no longer issue Form 17.4 and update DHS with
status G (Voluntary withdrawal by consumer)
or H (Withdrawal by a debt counsellor). There is
however varied ways in which a consumer can
be withdrawn from debt review which will be
set out below.
3. CAN
A CONSUMER WITHDRAW FROM DEBT REVIEW PROCESS ONCE A DEBT REVIEW
COURT ORDER HAS BEEN OBTAINED?
• Once
a debt review court order has been obtained a consumer cannot terminate or
withdraw
the debt review process, they can however
approach the court to rescind the order or apply for
an order which declares that the consumer
is no longer over-indebted.
• Upon receipt of the order, a debt counsellor
will notify the credit providers of the withdrawal by
means of Form 17.W and update DHS with
status G.
4. CAN A CONSUMER WITHDRAW OR TERMINATE
DEBT REVIEW PROCESS PRIOR TO
OBTAINING DEBT REVIEW COURT ORDER?
• Consumers can only withdraw or terminate
the debt review process prior to declaration of over-
indebtedness as per section 86(7) of the
Act and issuance of Form 17.2 subject to payment of
debt counselling fees as per NCR Debt
Counselling Fee Guidelines.
• If a determination is made and no court
order is in place, the consumer will remain under debt
review.
• A debt counsellor will notify the credit
providers of the withdrawal by means of Form 17.W and update DHS with status G.
4
5. CAN A DEBT COUNSELLOR SUSPEND HIS/HER
SERVICE FROM A CONSUMER UNDER
DEBT REVIEW PROCESS?
5.1 Where section 86(7) determination is
made and the consumer is not co-operating
• Where a consumer is not co-operating with
the debt counsellor (e.g. not providing relevant
information or proof, non payment of debt
counselling fees, etc) and a determination in terms
of section 86(7) of the Act is made, a debt
counsellor can suspend provision of his/her service
to the consumer.
• Prior to suspension of the service, a
debt counsellor will notify the consumer of the intended
suspension of service, the consequences and
allow the consumer 10 business days to remedy
the situation.
•Debt counsellor to remain the debt
counsellor on record for the consumer.
The following information should be
included in the notice of intended suspension to the
Consumer: i. Notice of pending service
suspension and the reasons thereof;
ii. Consequences of non co-operation(e.g.
risk of termination by credit providers, inability to
apply for further credit , consumer is
still under debt review, no withdrawal request to be
processed, etc) ;
iii. Option to remedy the situation within
10 working days;
iv. If no response is received and the
situation has not changed, consumers and credit
providers should be notified of the
suspension of service by means of Form 17.W.
5.2 Where a consumer has elected to make
direct payments to credit providers
• In terms of the NCAA, a consumer has a
right to make direct payments to credit providers and
not make use of the services of a Payment
Distribution Agent (PDA).
• Election by consumers to make direct
payments to credit providers cannot be construed as non
co-operation and should not be used as a
reason for suspension of debt counselling services.
The following information relating to
election to make direct payments should be included in
the Form 16 signed by the consumer when
they apply for debt review:
i. Consumer remains responsible to make all
payments as re-arranged, in full and on time.
ii.Proof of payments must be sent to the
debt counsellor on a monthly basis for record
keeping and to enable provision of after
care service as a consumer cannot be under debt
review without a debt counsellor.
5 iii. Consequences of making short or late
payments(e.g. risk of termination by credit providers)
iv. Debt counselling fees are payable to a
debt counsellor for services rendered and this
includes payment of aftercare fees.
v. For a debt counsellor to issue a
clearance certificate, all after care fees must be up to date.
Where the debt counsellor has suspended
provision of service, a consumer must provide
proof of settlement letters from credit
providers for a debt counsellor to issue a clearance
certificate.
6. CAN A CONSUMER BE TRANSFERRED TO ANOTHER
DEBT COUNSELLOR?
• A consumer under debt review may be
transferred to another debt counsellor subject to
payment of all debt counselling fees where
it has been established that the previous debt
counsellor followed the correct process.
• Form 17.7 should be used to facilitate
this process.
CONCLUSION
All debt counsellors are requested to
disclose this information upfront and in writing to consumers
to ensure that they are fully aware of the
implications of being under debt review.
FOR MORE INFORMATION PLEASE CONTACT:
Nomsa Mavundla
Telephone number 011 554 2804 nmavundla@ncr.org.za
Tshepa Molefi 011 554 2627
tmolefi@ncr.org.za
Pule Songo 011 554 2655 psongo@ncr.org.za
Georgina Kgadima 011 554 2896 gkgadima@ncr.org.za
Mmadikwa Phoshoko 011 554 2659 mphoshoko@ncr.org.za
Sharon Mokwena 011 554 2783 smokwena@ncr.org.za
Form 17.W (Withdrawal from Debt
Review)
Debt Counsellor’s Name
Registered Debt Counsellor. Registration
Number NCRDC 0000
To the Credit Department: Name of Credit
Provider
Address of Credit Provider
From: Debt Counsellor Name:
Registration number:
Address of Debt Counsellor:
Telephone:
E-Mail:
Date: Today’s date
Date Form 16 signed: Insert date F16 signed
Registered Debt Counsellor. Registration
Number NCRDC 0000
Name and Surname of Consumer(s):
Identity Number(s) of Consumer(s):
Account Number:
This notice serves to notify you that:
(Select the appropriate option)
a) The consumer has withdrawn from the debt
review process prior to issuance of Form 17.2
and the credit bureaus have been updated
accordingly via the NCR Debt Help System.
b) The debt counsellor has suspended
provision of service due to non-cooperation by the
consumer. The debt counsellor remains the
debt counsellor on record.
c) The consumer has obtained a court order
to rescind the debt review order. Credit bureaus
have been updated via the NCR Debt Help
System.
d) The consumer has obtained a court order
declaring the consumer no longer over
indebted. Credit bureaus have been updated
via the NCR Debt Help System.
Signed at
.................................................................................
on this day ............................................ of
.....................
Debt Counsellor Signature
.........................................................
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