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Reviews
If you want to remove the debt review notice from your credit records, and you still have outstanding accounts, a court order must be obtained to terminate the debt review process. A court order to cancel debt review is an order granted by a magistrate to notify credit providers and the credit bureaux that a court has cancelled the debt review process and confirmed that you are no longer over-indebted. The credit bureaux and credit providers alike must then remove the debt review notification from your credit records.
The debt review cancellation court application must show you are able to revert to paying the original contractual monthly amounts that you were paying before the debt review process. Once you terminate debt review, creditors may also demand that you make payment of the original contractual amounts if your debt is still enforceable and has not prescribed. Note: debt prescribes when payments are not made for a continuous period of 3 years and the creditor has not issued summons. (click here for more information on prescription)
You do not have to attend court when the application is presented to court, as attorneys familiar with these types of applications represent your case on your behalf.
Therefore, should you wish to terminate the debt review process, please complete the questionnaire below, to allow us to do an assess if you have reasonable prospects of success for a court application to cancel debt review and remove the debt review status.
All queries are responded to in writing within 24 – 48 hours and the response is sent from info@legalrights.co.za. Should you not receive a response, you can email directly info@legalrights.co.za or telephone/WhatsApp 061 490 9492.
You may want to read:
The Right to be issued with a clearance certificate and the cancellation of debt review
Debt and the Defence of Prescription Clarified
Data Retention Periods for credit bureau information
Sequestration, Administration and Debt Review Compared
The Effect of Rougier v Nedbank on the cancellation of debt review
The National Credit Act 34 of 2005 introduces debt review as a statutory debt relief measure for over-indebted consumers. If you are over-indebted you can submit an application to a registered debt counsellor for debt review. Hence the process is often referred to as “debt counselling”. Your right to apply for debt review is enshrined in Section 86 of the National Credit Act 34 of 2005. Section 79 in this Act defines “over-indebtedness” as follows:
“A consumer is over-indebted if the preponderance of available information at the time a determination is made indicates that the particular consumer is or will be unable to satisfy in a timely manner all the obligations under all the credit agreements to which the consumer is a party, having regard to that consumer’s—
(a) financial means, prospects and obligations; and
(b)probable propensity to satisfy in a timely manner all the obligations under all the credit agreements to which the consumer is a party, as indicated by the consumer’s history of debt repayment.”
If you are no longer over-indebted and you want to remove the debt review flag from your credit reports, you are able to cancel the debt review process. The National Credit Act 34 of 2005 does not set out how to cancel the debt review process, if you have not settled all the accounts. Before 2015, consumers could withdraw from debt review voluntarily without a court application. This was made possible by the debt counsellor issuing a Form 17.4, at the consumer’s request to cancel the debt review. However, the Form 17.4 is no longer applicable.
In 2015, the National Credit Regulator (“the NCR”) published Withdrawal from Debt Review Guidelines (Circular 002/2015) that acknowledged that the application of this voluntary withdrawal process was overturned by the judgment granted in the case of Rougier v Nedbank (27333/2010) [2013] ZAGPJHC 119 (28 May 2013). In Rougier v Nedbank, the court held that a debt counsellor does not have the statutory power to terminate and withdraw the debt review process. In response, the NCR’s Circular 002/2015 was published to detail the court application process that you must follow to withdraw and remove the debt review flag if you still have outstanding accounts and you are not entitled to a clearance certificate in terms of section 71 of the NCA.
In 2019, the full bench High Court decision of Van Vuuren v Roets and Others (37407/2018) [2019] ZAGPJHC 286; [2019] 4 All SA 583 (GJ); 2019 (6) SA 506 (GJ) (3 September 2019) (“Van Vuuren Judgment”) further cemented the necessity for consumers who are not over-indebted, to apply to court to cancel debt review. The NCR responded in 2021 by publishing the Withdrawal from Debt Review Guidelines (Circular 001/2021) that considered the debt review termination process in light of the Van Vuuren Judgment. In practice, the Van Vuuren Judgment has impacted mostly on consumers with debt review court orders, and now some courts no longer rescind debt review court orders. Where the debt review is not subject to a court order, the courts generally accept that the Van Vuuren Judgment is not applicable.
Hence, if you are no longer over-indebted as detailed in point (1) above, the debt counselling process can be cancelled and the debt review flag can be removed from your credit reports. Circumstances change and consumers may find debt review is not working for them or it is just not necessary anymore. This entails the rescission of the court order that enforces the debt review, or where a court order is not in place, the consumer can apply to be declared to be no longer over-indebted. The credit bureaux therefore adhere to the National Credit Regulator’s Withdrawal from Debt Review Guidelines which essentially only provide for the following options to withdraw from the debt review process:
(a) the consumer has withdrawn from the debt review process prior to the issuance of Form 17.2;
(b) the debt counsellor has suspended provision of service due to non-cooperation by the consumer but the debt counsellor remains the debt counsellor on record;
(c) the consumer has obtained a court order to rescind the debt review order;
(d) the consumer has obtained a court order declaring the consumer no longer over-indebted. We have assisted and continue to assist many with clearing the debt review flag from their credit reports.
The most common reason to seek to exit debt review, is that the debt review has the effect of preventing you from exercising your right to apply for credit. Debt review essentially freezes your rights to contract on credit, even if it does prevent creditors from suing you whilst under debt review. The freeze endures until the conditions stipulated in section 88(1) or (2) of the National Credit Act 34 of 2005 occur. These are the primary debt review exit requirements and these sections read as follows:
“Section 88: Effect of debt review or re-arrangement order or agreement
(1) A consumer who has filed an application in terms of section 86 (1), or who has alleged in court that the consumer is over-indebted, must not incur any further charges under a credit facility or enter into any further credit agreement, other than a consolidation agreement, with any credit provider until one of the following events has occurred:
(a) The debt counsellor rejects the application and the prescribed time period
for direct filing in terms of section 86 (9) has expired without the consumer having so applied;
(b) the court has determined that the consumer is not over-indebted, or has
rejected a debt counsellor’s proposal or the consumer’s application; or
(c) a court having made an order or the consumer and credit providers
having made an agreement re-arranging the consumer’s obligations, all the consumer’s obligations under the credit agreements as re-arranged are fulfilled, unless the consumer fulfilled the obligations by way of a consolidation agreement.
(2) If a consumer fulfils obligations by way of a consolidation agreement as contemplated in subsection (1) (c), or this subsection, the effect of subsection (1) continues until the consumer fulfils all the obligations under the consolidation agreement, unless the consumer again fulfilled the obligations by way of a consolidation agreement.”
Hence, where no order of debt rearrangement has been made, you can exit debt review by presenting the initial debt restructuring proposal to the Magistrate, together with additional information on your improved financial circumstances. In terms of section 87(1) of the National Credit Act 34 of 2005, the Magistrate must then “conduct a hearing and having regard to the proposal and information before it and the consumer’s financial means prospects and obligations” and decide whether to reject the recommendation or otherwise. If the facts show that you are not over-indebted, the Magistrate must, logically, reject the proposal because, in terms of section 79 read with section 88(1)(b) of the National Credit Act 34 of 2005 you are not over-indebted.
Section 71 of the National Credit Act 34 of 2005 is also another provision that regulates how you can exit debt review. This section provides as follows:
“Removal of record of debt adjustment or judgment
(1) A consumer whose debts have been re-arranged in terms of Part D of this Chapter, must be issued with a clearance certificate by a debt counsellor within seven days after the consumer has-
(a) satisfied all the obligations under every credit agreement that was subject to that debt re-arrangement order or agreement, in accordance with that order or agreement; or
(b) demonstrated-
(i) financial ability to satisfy the future obligations in terms of the re-arrangement order or agreement under-
(aa) a mortgage agreement which secures a credit agreement for the purchase or improvement of immovable property; or
(bb) any other long term agreement as may be prescribed;
(ii) that there are no arrears on the re-arranged agreements contemplated in subparagraph (i); and
(iii) that all obligations under every credit agreement included in the re-arrangement order or agreement, other than those contemplated in subparagraph (i), have been settled in full.
(2) If a debt counsellor decides not to issue or fails to issue a clearance certificate as contemplated in subsection (1), the consumer may apply to the Tribunal to review that decision, and if the Tribunal is satisfied that the consumer is entitled to the certificate in terms of subsection (1), the Tribunal may order the debt counsellor to issue a clearance certificate to the consumer.
(3) (a) A debt counsellor must within seven days after the issuance of the clearance certificate, file a certified copy of that certificate, with the national register established in terms of section 69 of this Act and all registered credit bureaux.
(b) If the debt counsellor fails to file a certified copy of a clearance certificate as contemplated in subsection (1), a consumer may file a certified copy of such certificate with the National Credit Regulator and lodge a complaint against such debt counsellor with the National Credit Regulator.
(4) Upon receiving a copy of a clearance certificate, a credit bureau, or the national credit register, must expunge from its records-
(a) the fact that the consumer was subject to the relevant debt re-arrangement order or agreement;
(b) any information relating to any default by the consumer that may have-
(i) precipitated the debt re-arrangement; or
(ii) been considered in making the debt re-arrangement order or agreement; and
(c) any record that a particular credit agreement was subject to the relevant debt re-arrangement order or agreement.
(5) Upon receiving a copy of a court order rescinding any judgment, a credit bureau must expunge from its records all information relating to that judgment.
In summary, section 71 therefore requires that a debt counsellor, under the stipulated conditions, may issue a clearance certificate. If the debt counsellor fails to give a clearance certificate, you can lodge a complaint with the National Consumer Tribunal.
Given the above, it is evident that the process to remove a debt review notice listing from your credit reports essentially depends on the status of the accounts that were included in your debt review, that is, whether you still have outstanding accounts or whether you settled all the accounts other than a home loan.
If your debt review is subject to a court order, then you must make, an application to set aside or rescind the debt review order. If there is no court order and you still have outstanding accounts, you must make a court application to withdraw the debt review process. Once the debt review order is rescinded or the court has withdrawn the debt review process, you can resume direct payments to the creditors and you are free to negotiate directly for new payment arrangements. In some instances, accounts may not have been paid for a continuous period of 3 years and the creditor has not issued summons or taken judgment for this account. Such an account is deemed to have prescribed and does not have to be repaid. Should you have any prescribed accounts, then the court application shall detail this.
Creditors may refuse to negotiate directly until the debt review process is withdrawn or set aside by the court. Your court application must therefore show that you are financially able to pay the original contractual amounts on your accounts. The reason is that creditors have the right to demand these amounts once the debt review is terminated by the court. However, if you are already paying the creditors’ directly, then the creditors are likely to accept the same payment arrangements.
Once the court application to withdraw the debt review is granted, the court order and entire court application is submitted to the National Credit Regulator (NCR) for verification. If satisfied with the validity of the submitted documents, the NCR then updates your status to G1/G which results in the ensuing removal of the debt review flag from your credit reports that are held by the various credit bureau. Generally, the NCR verification process takes 7 – 20 business days to complete. Albeit that the ensuing credit bureau update ought to occur automatically after the NCR’s update, we still advise that you obtain your latest credit reports to verify same once we have provided you with the NCR’s written update confirmation.
The process normally takes 3 – 6 months to complete. The process is this long as a court application must be drafted and necessary time period formalities observed to ensure that the court application is properly placed before the court. For example, the court application to withdraw the debt review must be served on all the creditors at least 20 business days before the court date and proof of this service notification must also be filed at court. Hence, the process seldom ever takes less than 3 months to complete. Further, in some instances, questions or concerns can be raised by the court, or debt counsellor, or even delays with obtaining the debt counselling documentation can result in the process taking longer. Our assistance with this process does include attending to any court postponement that may arise at no additional cost to ensure that a final decision is obtained from the court.
The following are explanations to some of the most common misunderstandings about the debt review cancellation process.
Once your financial circumstances have improved and you can pay the original monthly instalments due to creditors, then you can make a court application to terminate debt review. If you are no longer over-indebted it would be unjust and in breach of the spirit of the National Credit Act o have you listed under debt review. The National Credit Act 34 of 2005 essentially protects the consumer, and where relevant aids in the fiscal rehabilitation of the consumer.
In the case of Rougier v Nedbank, 27333/2010 (South Gauteng High Court),
the court held that a debt counsellor does not have the statutory powers to terminate or withdraw debt review. The NCR’s Withdrawal from Debt Review Guidelines were published on 25 February 2016 to take into account this ruling. Before, the debt counsellor would simply issue a Form 17.4 to cancel the debt review process, but Form17.4 has now been replaced by the Form 17.W. This form only caters for termination of debt review under the following circumstances:
A. The consumer has withdrawn from the debt review process prior to issuance of Form 17.2 and the credit bureaus have been updated accordingly via the NCR Debt Help System.
B. The debt counsellor has suspended provision of service due to non-cooperation by the consumer. The debt counsellor remains the debt counsellor on record.
C. The consumer has obtained a court order to rescind the debt review order. Credit bureaus have been updated via the NCR Debt Help System.
D. The consumer has obtained a court order declaring the consumer no longer over-indebted. Credit bureaus have been updated via the NCR Debt Help System.
Only point A, C or D result in the termination of the debt review process and the removal of the debt review signifier from the consumer’s credit reports. Thus, once the Form 17.2 has been issued and it is detailed that your debt review application has been accepted, this shall be noted on your credit report. Unless you pay up all accounts and become entitled to a clearance certificate, the only way to terminate the debt review process, according to the NCR’s Withdrawal from Debt Review Guidelines, is to apply to court for either the rescission of the debt review order if one was obtained, or for a determination that the consumer is no longer over-indebted.
As detailed in the National Credit Regulator’s Removal from Debt Review Guidelines, the termination of the debt review process is only possible if you apply to court to rescind the debt review order if one was obtained, or for a determination that you are no longer over-indebted. These are the only two circumstances in which a Form 17.W can be issued that results in the removal of the debt review signifier from a credit report. If you have paid up all the accounts that are under debt review then neither of the two circumstances shall apply, as you are then entitled to a clearance certificate that your debt counsellor must issue. You may also obtain a clearance certificate if you only have a bond account outstanding and it is up to date. If you have any other account outstanding, you must show by court application, that you can afford to pay the account and that you are not over-indebted.
It is permissible for you to represent yourself at court. However, the formalities of making an application are best understood by an attorney and mistakes in the application can result in the dismissal of the application or postponements that can readily be avoided. As such, you are advised to employ the services of an attorney to attend to the court application to terminate the debt review process and to ensure that once the court application is granted, your credit information is updated accordingly with the credit bureaux and National Credit Regulator to reflect that you are no longer under debt review.
You do not have to be present at court. You must facilitate the process where required, typically by providing required information and documentation.
Realistically, the debt review cancellation process can never take less than 2 months. Firstly, the court application must be prepared and a court date must be obtained. The court date is never likely to be less than 2 weeks away, as the court application must be served on the debt counsellor and the creditors. Furthermore, the allocation of a court date depends on the case load that the court has before it already. Thereafter, once the court order is obtained, the debt review signifier must be removed from the consumer’s credit reports and from the NCR’s database. This takes a minimum of 20 business days as per the National Credit Act 34 of 2005.
The application to terminate debt review depends on your ability to show you are no longer over-indebted. If you cannot afford to increase the debt review repayment amounts, preferably to the amounts that they were paying before commencing with the debt review process, it is highly unlikely that the application shall succeed unless the creditors have indicated acceptance of such reduced payments. click here if you cannot afford debt review
Section 88 (3), provides that a creditor may not take legal action to enforce a credit agreement if you have already applied for debt review and the application has been accepted and you have been declared over-indebted. This provision only applies while you are under debt review. As soon as your debt review is terminated, creditors have the right to take legal action to enforce a credit agreement that was previously subject to debt review, typically calling upon you to settle any arrears that may have accumulated on the account and reverting to the original initial contractual repayment amount.
The following are frequently asked questions about the cancellation of debt review.
Q: I want to remove my name under debt review but have not finished paying my debt. Is it possible?
A: Yes, this can be done if your debt review was made an order of court and the court order is subsequently rescinded or an application is made to court to have you declared not over-indebted.
Q: I have paid up all my accounts that were under debt review but my credit report still reflects the debt review status. What must I do to remove the debt review status from my credit report?
A: A clearance certificate can be obtained to remove the debt review flag indicator. The clearance certificate can also be obtained where there is an outstanding mortgage agreement that reflects no arrears and is up to date and all the small credit agreements have been paid up.
Q: Please advice on how exiting the debt review prematurely will affect my credit record & do you think I can qualify to get credit finance immediately after exiting debt review?
A: Once the debt review process is terminated the debt review status will be removed from your credit report thereby improving your creditworthiness. We also advise that you get your latest credit reports and check whether any of your credit reports contain negative information other than the debt review status as any other negative information can affect your credit application even once the debt review status has been removed from your credit report. After all, whether you will be able to obtain finance after the removal of the debt review status depends upon the general state of your credit report.
Q: My debt review was a consent order that was confirmed by the National Consumer Tribunal. Can this be set aside?
A: Besides the powers given in the National Credit Act 34 of 2005 to the Magistrate’s Court to grant a court order confirming the reduced payment arrangements with the consumer, the said Act also gives the National Consumer Tribunal the power to grant a consent order confirming the resolution or reduced payment arrangements. Where a consent order has been granted, it is important to note that in terms of section 165 of the National Credit Act, an order granted by the National Consumer Tribunal can only be rescinded or varied in any one of the following instances:
1. Where the order was erroneously sought or granted in the absence of a party affected by it;
2. Where the order contains an ambiguity, or an obvious error or omission, but only to the extent of correcting that ambiguity, error or omission;
3. Where the order was made or granted as a result of a mistake common to the parties to the proceedings.
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