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You Still Have Rights, No Matter Your Financial Situation

There’s a day in the United Nations’ calendar to observe just about everything from World Radio Day to World Book and Copyright Day, so it’s not unexpected if World Consumer Rights’ Day often slips by unnoticed.

In South Africa, the Consumer Protection Act of 2008 is the main piece of legislation that seeks to safeguard consumers. Amongst other things it sets out norms and standards, promotes a consistent legislative and enforcement framework and prohibits unfair marketing and business practices.

Benay Sager, chairman of the National Debt Counsellors’ Association, explains that while it’s the primary law aimed at protecting consumers, it isn’t the only piece of legislation to do so. Another is the National Credit Act.

Like the Consumer Protection Act, the National Credit Act, and its regulations, provide a swathe of provisions aimed at ensuring consumers aren’t harmed. For example, it requires that credit providers make sure an applicant is able to afford the repayments before approving a loan.

The National Credit Act, one of the most progressive credit legislations in the world, also provides a legal framework for consumers who are in financial difficulty to restructure their debt.

“This is an incredibly important provision in a country such as South Africa. The National Credit Act provides protection for consumers in the form of debt counselling and provides the legal framework that enables this to be done in a safe and transparent manner,” says Sager.

By providing for debt counselling, the National Credit Act provides consumers with the right to lift the burden of debt. There’s no doubt it works, but what are your rights as a consumer if you find yourself in a situation where you think you may need help?

Anyone has the right to approach a registered debt counsellor. If you are applying for debt counselling and are married in community of property you need to do so with your spouse.

You also have the right to select a debt counsellor in whom you feel confident and who will provide the necessary support throughout the process. The debt counsellor needs to be reputable. Professional bodies such as the National Debt Counsellors’ Association ensure their members maintain high standards that consumers are protected and have recourse.

You are entitled to complete transparency. Ask as many questions as you can about the process, how and when payments are made, what you should expect from your debt counsellor, how long the process will take, what happens if your situation changes during debt counselling and anything else about which you are uncertain or is causing concern.

Understanding whether you’re over-indebted is the first step. To determine this, the debt counsellor will conduct a comprehensive financial assessment.

If you are overindebted and then decide to apply for debt counselling, the counsellor informs all your creditors and the credit bureaus. If your creditors accept, the debt counsellor then renegotiates reduced monthly payments on all credit agreements that fall under the National Credit Act. This restructuring of debt strikes the balance between your ability to pay and your overall level of debt.

You have the right to work through your debt counsellor to interact with the creditors. Creditors should no longer contact you directly about outstanding debt but instead contact the debt counsellor. 

Along with your rights, you also have some obligations that come with the debt counselling process. Once the restructuring process is concluded the debt counselling agreement is approved by a court or the National Credit Tribunal. You are then required to make one affordable payment each month, which is distributed to creditors via an independent Payment Distribution Agency, also regulated by the National Credit Act.

Once you’ve cleared your unsecured debt and are up to date on your bond payments – if you have a bond – then you have the right to receive a clearance certificate. The debt counsellor issues you a clearance certificate, confirming all the accounts listed under the agreement are paid up. Home loans are the exception and do not have to be fully paid but must be up to date. The debt counsellor will inform the credit bureaus by providing them the clearance certificate.

“The National Credit Act provides a vital and effective legal framework for over-indebted consumers to restructure and pay off their debt and get a fresh start,” says Sager.

“It is one of the reasons South Africa has such an effective, world-class debt counselling sector and that over the past four years there has been a 40% per annum increase in the number of people successfully completing the process.”