Monday, 28 August 2017

Debt relief and law failing South Africans

In November 2016 IOL published this article by Angelique Arde,
LAW FAILING CONSUMERS DROWNING IN DEBT.
https://www.iol.co.za/personal-finance/law-failing-consumers-drowning-in-debt-2089323
The National Credit Act in acted in 2007 was never intended to offer real relief to over indebted consumers. It was poorly conceived and poorly executed.
It has never addressed reckless credit.
The act was written to protect credit providers from the shock of the financial crisis of the time.
Debt counsellors are poorly trained and often apply debt review as a  multi purpose tool for all debt problems.
The problem with the debt review debt solution is that debt currently owed will have to be repaid in full including costs and interest. No provisions are made for a write off of debt.
Consumers are rejected for debt review if they are unable to settle their un secured debt in five years or less.
Debt counsellors have effectively become the debt collectors of the credit providers and it has become more profitable for credit providers when accounts go into counselling as more interest is charged over a longer period than what was originally agreed.