Debt Counselling/ NCA?

What is debt counselling?

The NCA allows for debt counsellors to be registered and to assist consumers who are over-indebted, or who fear they may be over-indebted. The debt counsellor will assess the consumer's financial position and will liaise with the credit providers, or make a recommendation that the consumer is over-indebted. Whilst a consumer is under debt review, s/he may not apply for credit.

What about consumer rights?

The NCA lists a number of consumer rights, which are protected by the Act – that means that if a protected consumer right is breached, the party who breached it is committing an offence in terms of the Act.

The following are protected consumer rights in the NCA:

· The right to apply for credit;

· The right to protection against discrimination in respect of credit;

· The right to reasons for credit being refused;

· The right to receive documentation relating to the credit agreement;

· The right to receive documentation in plain and understandable language;

· The right to challenge records on the credit bureaux and to be compensated

if the information is incorrect;

· The right to receive documentation in certain languages;

· The right to confidentiality.

Getting Black listed and ITC!

Going under debt review and counseling means that ITC or any Credit Beureu cannot black list you, you cannot be sequestrated or lose any of your assests!

Understanding the National Credit Act (NCA)

New legislation always introduces some uncertainty because people are not always sure who it applies to, what is covered, what has changed and so on. We compiled the 10 most important facts you, as a consumer in South Africa, should know about the NCA.

The objective of the NCA

The most important objectives of the NCA are to level the playing fields amongst all credit providers with regard to the manner in which credit is granted, how consumers are treated when applying for credit and during the relationship with the credit provider and to limit over-indebtedness by placing a responsibility on credit providers to ensure that they do not grant credit reckless

What is covered by the NCA

The NCA applies to credit agreements entered into after 1 June 2007 between a consumer and a credit provider – banks, micro-lenders, furniture stores, clothing stores, appliance stores, vehicle financiers, etc.

Credit agreements include

· Credit cards

· Mortgage loans

· Instalment agreements

· Financial lease agreements on movable assets

· Overdraft facilities on cheque accounts

Who are included in the scope of the NCA?

All natural persons, in other words individuals, fall within the scope of the NCA. Certain juristic persons are also included – like companies, Close Corporations, Trusts (with more than three trustees), partnerships, with a turnover or asset value less than R1million.

What has changed in the credit granting process?

Every credit provider will still follow its own unique credit granting process, but there are certain legal requirements which all registered credit providers must follow.

These requirements include:

· Doing a full assessment of the applicant's credit and debt repayment history;

· Doing an affordability assessment to see if the applicant will be able to afford the credit being applied for;

· Providing the applicant with a quotation and pre-agreement (see below);

· Determining if the applicant understands and appreciates the rights and

obligations of the credit agreement.

All in all, although the act has stopped alot of overspending and creditors it is certainly a good thing to introduce the NCR to regulate the Act and give the consumer back some power over their creditors and most importantly with Debt Counsellors a consumer who is overindebted can now take control of their financial problems!