Upon application for debt review by a consumer, and once the debt counsellor has made the determination that a consumer is over-indebted in terms of Section 86(6)(a) of the National Credit Act, the debt counsellor will note a “flag” or record of the debt review on the credit bureaus.
The consumer’s credit bureau record will thus indicate that the consumer had applied for debt review. Should the consumer decide to cancel the debt review, the debt counsellor cannot merely remove the said flag if all debts are not paid, but the consumer can approach the Magistrate’s Court for such removal.
Such application to the Magistrate’s Court can be done only prior to the debt restructuring proposal being made an order of Court in terms of Section 86(7)(c) of the National Credit Act.
Our offices will gladly assist you in referring an application in terms of Section 87(1)(a) of the National Credit Act to the Magistrate’s Court.
The application should prove to Court that the consumer is not over-indebted and that the flag should, therefore, be removed. The Court orders that the debt counsellor’s finding of over-indebtedness shall be rejected, in effect thereby declaring that the debt review is uplifted. This application is only appropriate when the administrative process and Court proceedings were not completed with the debt counsellor.
Once the above order has been obtained from Court, it will be presented to the debt counsellor in order for them to remove the record of “debt review” from the credit bureaus.
Frequently Asked Questions About Debt Review Upliftment
1. Can a consumer withdraw or terminate a debt review process prior to obtaining a Debt Review Court Order?
Consumers can only withdraw or terminate the debt review process prior to the 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 of over-indebtedness is made by the debt counsellor and no Court Order is in place, the consumer will remain under debt review.
2. What does the debt counsellor do when the debt review process is cancelled by me?
A debt counsellor will notify the credit providers of the withdrawal by means of Form 17.W and update DHS with status G.
3. Which Court is the correct forum to approach to remove this credit bureau record?
The Magistrate’s Court has the requisite power to declare the consumer over-indebted or not over-indebted
4. At what stage do I need to approach the Court to remove the credit bureau record?
If the debt counsellor has recommended that the consumer be declared over-indebted and the Form 17.2 has been issued to Credit Providers, the consumer must approach the Magistrate’s Court with the relevant jurisdiction to be declared not over-indebted and no longer under debt review.
5. What application is referred to Court?
A court application in terms of S87(1)(a) must be made to the Magistrate’s Court with the relevant jurisdiction requesting the Court to reject the debt counsellor’s recommendation that the consumer is found over-indebted and declare the consumer no longer over-indebted.
6. What does the application entail?
The application must advise the Court that the consumer has been found over-indebted by the debt counsellor and a copy of the Form 17.2 must be attached.
The application must advise the Court that the consumer is no longer over-indebted and must include the consumer’s financial circumstances at the time in the motivation of the aforesaid. The application must further advise the relevant Magistrate’s Court that the consumer no longer needs to be under debt review.
Application to rescind the order for “Debt Review” in terms of Section 86(7)(c) of the National Credit Act:
Should a consumer wish to cancel the debt review process once the Court has granted an order for a debt counsellor’s restructuring proposal to be effected in terms of Section 86(7)(c), a need arises for a rescission application.
Once a debt review 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. A subsequent Court Order, therefore, has to be obtained emanating from the previous Court application.
Once the rescission has been granted, such order may be presented to the debt counsellor in order for the record to be removed from the Credit Bureau.
Our offices will gladly assist you in referring an application for rescission of a debt review to the Magistrate’s Court.
Once the above order has been obtained from Court, it will be presented to the debt counsellor in order for them to remove the record of “debt review” from the credit bureaus.
Frequently Asked Questions About rescission application for a debt
1. What does a rescission application for a debt review entail?
- An application for rescission of the granted debt review Court Order requesting that the consumer be declared no longer over-indebted at the Magistrates Court with the relevant jurisdiction.
- This application for rescission must advise the Court that the consumer had been found over-indebted by the Magistrates Court and a copy of Court Order is to be attached as an annexure.
- The application for rescission must advise the relevant Magistrates Court that the consumer is no longer over-indebted and must include the consumer’s financial circumstances at that time in the motivation of the aforesaid.
- The application for rescission must further advise the relevant Magistrates Court that the consumer no longer needs to be under debt review.
2. What are the consequences of such rescission being granted?
- Upon receipt of the granted rescission Court Order the debt counsellor must:
- Notify all the credit providers of same by means of the Form 17.W and attach a copy of the granted rescission Court Order;
- Remove the consumer’s debt review flag on the credit bureaux by updating it with the relevant status code.
3. When is a rescission applicable?
In circumstances where a debt review order has been granted in terms of Section 86(7)(c) of the National Credit Act.
4. When will the Court grant these orders?
The Court will not grant the order if the credit agreements, not being mortgage or long-term agreements, have not been settled, or can be settled in lump sum payment by the consumer. Re-instatement of the original terms of the credit agreements are not acceptable in circumstances where an order has been granted by Court and rescission is required.
5. What application is referred to Court?
A court application in terms of S87(1)(a) must be made to the Magistrate’s Court with the relevant jurisdiction requesting the Court to reject the debt counsellor’s recommendation that the consumer is found over-indebted and declare the consumer no longer over-indebted.
6. What does the application entail?
The application must advise the Court that the consumer has been found over-indebted by the debt counsellor and a copy of the Form 17.2 must be attached.
The application must advise the Court that the consumer is no longer over-indebted and must include the consumer’s financial circumstances at the time in the motivation of the aforesaid. The application must further advise the relevant Magistrate’s Court that the consumer no longer needs to be under debt review.
