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The National Credit Act (NCA) came into effect in June 2007 and with it came the process of Debt Review or Debt Counselling.

The consumer applies for debt review at the debt counsellor or consultant. The consumer must know the debt review process and the fees that go with Debt Review. Debt counselling will have an influence on the consumer’s credit rating, but this is temporary while the consumer is in debt counselling. The consumer can decide to leave debt review status at any time.

The fees must be explained to the consumer so that he or she knows the cost. Debt counselling can be expensive, but is far better than losing your house or car to the sheriff of the court. In the current economic market you will get well below market value for your assets at an auction.

The consumer completes and signs a debt review application form after consultation with debt counsellor or consultant. The form is called a Form 16. Form 16 together with supporting documents is handed over to the debt counsellor or consultant. All details must be completed on a form 16 so that the debt counsellor has the full picture. All personal details must be entered as well as a budget will all details.

The budget is very important to the debt counsellor to determine if the customer is over indebt or not. Supporting documents are necessary to confirm account name, account number, address and creditor details with amount outstanding and monthly instalments.

The details on the form 16 are captured immediately. All creditors will be notified in 5 business days or sooner with the notice form 17.1 that consumers is applying for debt counselling. The debt counselling application is now in progress. It is not possible for any creditor to take legal action now.

The debt review process takes 60 working days. The creditor has 5 business days to provide information on consumer. The debt counsellor will check the details he received from the consumer to see if the details are correct. After 5 days, the creditor is reminded to give feedback.

Another 10 days grace is given to the creditor to reply to notice debt counsellor sent.

If the debt counsellor does not receive conformation from creditors, he may presume that the figure provided by consumer are correct. The debt counsellor will now determine if consumer is over in debt, meaning that the debt counsellor must calculate if the consumer’s monthly debt commitments are more than the monthly income.

The debt counsellor will now prepare a debt-restructuring proposal to the creditors. The proposal must be sent 25 days from date of application to the creditors. All creditors have 10 days to respond. If there is a delay from the creditors, the creditors will get a reminder and another 5 days to respond.

The proposal will be sent to the Payment Distribution Agency to start the distribution to creditors. That is the debt review process in a nutshell.

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