Choos­ing a debt coun­sel­lor crit­i­cal

This re­la­tion­ship may span more than a decade

Sowetan - - Your Money - By An­gelique Ardé

It’s not un­com­mon for debt coun­sel­lors to ter­mi­nate their ser­vice with clients, dereg­is­ter from the in­dus­try, or die, leav­ing their clients feel­ing high and dry.

But, if the con­sumer has a court or­der declar­ing him­self or her­self over-in­debted and re­struc­tur­ing re­pay­ments to cred­i­tors, they need not feel vul­ner­a­ble, says Pre­to­ri­abased debt coun­sel­lor Re­nee Marais.

So, what should you do if you sud­denly find your­self with­out a debt coun­sel­lor, and what are your rights?

Marais says your two most im­por­tant rights are your right to en­gage a debt coun­sel­lor of your choice, and your right to pay your cred­i­tors di­rectly rather than via a pay­ment distri­bu­tion agent (PDA).

When a debt coun­sel­lor dies, doesn’t re­new their reg­is­tra­tion or is dereg­is­tered by the National Credit Reg­u­la­tor (NCR), the reg­u­la­tor “trans­fers” the debt coun­sel­lor’s con­sumers to a new debt coun­sel­lor to en­sure there is con­ti­nu­ity of ser­vice.

If this should hap­pen to you, it’s im­por­tant that you are happy to ap­point the debt coun­sel­lor to whom you have been trans­ferred, as the de­ci­sion is yours, Marais says.

The NCR is the reg­u­la­tor of credit providers, debt coun­sel­lors and credit bu­reaus. It does not have au­thor­ity over you as a con­sumer of credit.

Your orig­i­nal debt coun­sel­lor would have had a power of at­tor­ney to act on your be­half, and that needs to be re­voked be­fore you can give a power of at­tor­ney to your new debt coun­sel­lor, Marais says.

It should go with­out say­ing that the de­ci­sion to give some­one the power to act on your be­half should not be taken lightly. Not only do you need to be able to trust the per­son to act in your best in­ter­ests, you also need to have a ser­vicelevel agree­ment with them so that you know what you can ex­pect from them.

Ja­cob Ra­monti, a Sowe­to­based debt coun­sel­lor, says ide­ally you should en­gage a debt coun­sel­lor who has at least five years’ ex­pe­ri­ence, and who has been men­tored by a se­nior debt coun­sel­lor.

Your re­la­tion­ship with your debt coun­sel­lor may span a decade or more, de­pend­ing on how long it’s go­ing to take you to be debt-free, which is why it’s im­por­tant that you find some­one that you can trust and re­late to.

Very of­ten, what binds con­sumers to their debt coun­sel­lors is the PDA, says Michelle Barnardt, a debt coun­sel­lor in Mpumalanga. The role of a PDA is to re­ceive a sin­gle in­stal­ment from you when you are in debt coun­selling and then dis­burse this to your var­i­ous cred­i­tors. The PDA also takes a fee and pays the debt coun­sel­lor’s fee.

The National Credit Act states that con­sumers in debt coun­selling have the right to pay their cred­i­tors di­rectly – and need not use a PDA.

“It is the con­sumer’s re­spon­si­bil­ity to pay their debts and by do­ing so, they are able to keep track of all pay­ments made to their cred­i­tors,” says Marais.

When a PDA dis­trib­utes on your be­half, you are be­holden to the debt coun­sel­lor, she says. “Us­ing a PDA may be con­ve­nient, but there is the risk that you lose track of where your money is go­ing, and lose con­trol of your hard-earned cash.

“You need to know when your money is paid to each of your cred­i­tors and how much was paid, so that when credit providers or their col­lec­tion agents call you, claim­ing that you’ve not paid your monthly in­stal­ment, you are able to re­spond to these calls armed with ac­cu­rate in­for­ma­tion.”

Marais says one of the most com­mon complaints from con­sumers in debt coun­selling is that their cred­i­tors – or debt col­lec­tors hired by cred­i­tors – are phon­ing them, claim­ing that pay­ment hasn’t been re­ceived.

“If you are the per­son who made the pay­ment, you are per­fectly po­si­tioned to ad­dress these callers,” says Marais.

As a con­sumer of credit, you are con­trac­tu­ally re­spon­si­ble to pay your cred­i­tors all that you owe to them. You can­not del­e­gate that re­spon­si­bil­ity to a debt coun­sel­lor.

The NCR failed to com­ment when asked for ad­vice on what con­sumers should do when their debt coun­sel­lor is no longer able to pro­vide the re­quired ser­vices.

‘‘ You need to know when your money is paid to each of your cred­i­tors

/123RF MICHAEL ZHANG

Ap­point­ing some­one to act on your be­half should not be taken lightly.

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