Good dayI need help or guidance with cle...

Asked by mvdventel on 25-09-2020 22:25:08
Question posted in the Consumer Protection Law category relating to Western Cape

Good day

I need help or guidance with clearing  my Record at the Credit Bureau and what the cost will be.

I’m currently still Under Debt Review - but I have managed to Pay off 6 of my Creditors.

They have offered me discounts on my outstanding balances - so I have managed to pay them off with once-off lump sum payments.

Two of my Loans have prescribed. There are still 2 Creditors left that I have to pay off.

My Debt Restructuring person who is supposed to assist me in this regard, has basically left me in the lurch and is not responding to my requests.

I understand that I have to pay off all my Debts first, before the clearance can happen.But I would just like to know what the process would be as I intend to also pay off the 2 outstanding debts very soon. And who can I contact to assist me with that.

Thank you & Regards


Answer to the Question

Posted by Att. Patrick on 26-09-2020 09:10:16

Hi there Michelle and thank you for your question,

I am a practicing attorney based in South Africa and I will assist you with your question. Please feel free to ask as many follow up questions in order to clarify your question. If you have a new question, you must please open a new thread.

It certainly sounds as if you are on the right track to clearing your credit record.

The one thing that you need to be aware of is that a credit provider is allowed to keep any adverse information listed on your credit record for up to 2 years. This means that even if you pay off a certain credit provider in full next month, they do not have to agree to remove your adverse information. They can leave it there, listing you as a bad payer, or such like, for the next 2 years. So, while you might not be able to actually clear your record now, you are on the right track to it getting cleared.

Furthermore, the 2 creditors where the loans have prescribed, I don't think that they will agree to remove the adverse information from your credit record without payment. The adverse information will eventually be removed in accordance with the time periods set out in the National Credit Act and the Regulations, but that might also take 2 years. You should realise that just because 3 years have gone by, it does not mean that these 2 creditors don't have valid claims against you. It is just that you have a rock solid defence of prescription which means that they can't proceed legally against you for the debts - essentially the debts have been written off, but the fact that the loans were unpaid can still be listed on your credit record for the 2 / 3 years. 

Why has the debt restructuring person stopped communicating? Is there a reason for this that you could think of? You must keep the communication up and get hold of this person, or you must find where they are registered and then lay a complaint with them. Or, what you can do is to find another person who can assist in taking over the process from him. That might be the best plan.

Also remember, the debt restructuring process essentially stops your creditors in taking legal steps against you (default judgments and the like) in instances where you have negotiated payments to them but on different terms to what they would like in terms of the original agreement. Once you've paid them in full, the original debt is discharged and you can go on with your life. 

If a creditor has already taken a default judgment against you, you will need to pay them off, then ask them for a consent to rescission of default judgment, and then apply at the Magistrates court for rescission of the default judgment. Then the default judgment will be removed from your credit record.

If there is a part of the answer which you need more advice on, or clarity please continue in this same thread instead of opening a new question.

Att. Patrick

Please remember this is a dialog if you have follow up questions please use the REPLY button and ask. If I did not answer the question you thought you were asking, please respond with the specific question you wanted answered. I hope you found my answer helpful, and you have finished asking your questions, please click on the GREEN ACCEPT button in order to mark the question as closed.

Information provided by client

Thank you Patrick

DMC Collections has sent me an SMS to say that my Woolworths account has prescribed and the Balance will be written off and the Account closed. Should I rather get this in writing? Or is SMS sufficient?
Are the Creditors allowed to still charge high interest when you are under Debt Review?
Is there a maximum or minimum interest rate that they can charge?
Also some of my accounts has been handed over to the Legal dept / or external lawyers And they are charging me Finance charges plus Fees
e.g. Rossouw is handling my Nedbank credit card debt and I asked them for a Statement and I see that they have Finance charges plus Fees on it.
Best Regards

Answer to the Question

Posted by Att. Patrick on 27-09-2020 09:10:11

So you need to realise that Woolworths can still issue a summons for the debt and they could get a judgment against you if you don't defend the summons. Prescription is merely a defense that you can raise, a good defense, but just a defense. Woolworths could also write off the debt and list it as 'written off' on your credit report. So even though the debt has prescribed, they can still list adverse information.

Creditors are still allowed charging the same interest rate that they could when you entered into the agreement. The debt review process just forced them to work with you to accept lower monthly payments over a longer period of time. 

The maximum interest rate is as per the national credit act. 

They can only charge you for finance charges or legal services if that formed part of the initial agreement. Otherwise they can only recover legal fees from you if they get a judgment and then draw up an itemized bill of costs. 

Information provided by client

Thank you once again Patrick

OK I understand about Woolworths - they are still the Creditor and the Collections Company DMC only managed the Debt Collection part. DMC cannot write off the Debt or Remove the adverse info from my credit record. Woolworths has to do it. Is that correct?

What if the Debt was sold to a another party e.g. DMC - then DMC can write it off & remove the adverse info?

Also once I've paid off my debts, is it only a lawyer than can help me clear my record or can I also get a Debt review company to do it - seeing that my debt restructuring guy has abandoned me.
I'm asking because from your responses I see that there a court procedures involved in the clearing process.
Best Regards

Answer to the Question

Posted by Att. Patrick on 27-09-2020 22:36:52

Woolworths could write off the debt in their books and list the debt as "written off", and then sell the debt to a debt collection company. You'd need to convince Woolworths (in this example) to remove the adverse information.

You only need a lawyer to assist if there is a default judgment which needs to be rescinded (removed) because that happens through court. 

Information provided by client

Thank you Patrick. I have one more question, which is related to my paying off the Debts:
But I'm not sure if I should open another Thread?

One of the main reasons that Im paying off the Debt in Lump sums was to get rid of my bad credit history and clear my record / name at the Credit Bureau.
I didn't realize that my payment history will remain there for years to come.

My husband & I are Married in CoP and he wants to buy another house. Our current house is paid off and he is not owing anything on it.

So our main concern was that because we are Married in CoP, my bad credit record would have affected him getting a loan from Bank. So we wanted to my record to be clean
He only has 5 more years to go before he retires and I will still be working another 15 years.

He says the Bank wont give him a Loan on his Salary alone, because he is so close to retirement. If he were working for another 15-20 years then they would have. I dont know if he actually asked them this specifically or just assuming.

What would be the best way forward for us now, seeing that my payment history will remain there for long time. Because I wont get a loan with my bad history.

Thank you & Best Regards

Answer to the Question

Posted by Att. Patrick on 30-09-2020 15:47:57

The only way that you can proceed is to make a joint application for a home loan in both your names, and hope that the bank will understand your personal credit record history and accept that you are dealing with it.

Otherwise, you could possibly buy the house in the name of a trust and get the trust to make the application, however the bank might still ask for your financial records and refuse you.

It is a very difficult question, because I don't really know what to suggest.

Surely if you are selling your current house, and then buying a new house, you would only be looking for a bond for a small portion of the puchase price? i.e. you would be getting a 30% or 40% bond, and not a 90% bond.

The bank must understand that there would then be lots of equity in the property, which should bring down the risk factor.

Answer Accepted

This answer was accepted on 30-09-2020 19:57:44

Information provided by client

Thank you Patrick
We are not wanting to sell our current house, sorry I did not mention it.
but thank you & Regards

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