According to the National Credit Regulator, there are more than 17 million consumers in South Africa who are in arrear with their debt obligations.

This is a staggering statistic and indicative of over indebted consumers being in urgent need of debt relief.

The National Credit Act provides for a process in terms whereof over-indebted consumers can apply to a debt counsellor for debt relief (the debt review process).

A debt counsellor will consider, evaluate and review an over-indebted consumer’s financial obligations and develop a payment plan in terms whereof such consumer’s debt obligations are re-structured and reduced to affordable amounts. Thereafter a debt counsellor will cause the payment plan he would have developed, to be converted to an order of court and to which all the consumer’s creditors will be bound. In short, a consumer will, with due regard to his income and required living expenses, only pay his creditors what he realistically can afford to pay.

Whilst under debt review, a consumer enjoys complete and absolute protection from his creditors in that the latter cannot institute any legal proceedings against a consumer under debt review. In addition, a consumer is equipped to not only conquer his debt, but to once again lead an affordable economic life and to adequately provide for his family.

Surprisingly, only approximately 105 000 over-indebted consumer’s have hitherto availed themselves of the debt review process. I suggest that the reason for this is that consumers are unaware of the availability of the debt review process, alternatively, that they allow considerations of pride or embarrassment preventing them from availing themselves thereof.

This is both unfortunate and irresponsible, as debt will not disappear and unless dealt with, will result in legal action and which will only compound a consumer’s already desparate financial situation.

Debt respects no class and in view thereof that lawful and effective debt relief is readily available, I recommend that consumers, who are struggling to make ends meet, consider approaching a reputable and knowledgeable firm of debt counsellors for assistance, before any legal action is commenced with. Most certainly, consumers should not live in a state of denial by ignoring their debt obligations.

Next month I will discuss the potential ramifications of legal action and how it can be avoided.

Mr. JR Bester is a practicing attorney specializing in statutory debt relief mechanisms available to over-indebted consumers.

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