A new law that affects the debt counselling industry, the Debt Intervention Bill, was passed through parliament and signed by the president 2 weeks ago.
The question on everyone’s lips: will my debt be written off?
The Debt Intervention Bill or Debt Relief Bill is a new law and part of the National Credit Act’s National Credit Amendment Bill. Changes have been made and added to the National Credit Act, which is the act that debt counsellors work under.
How does the Debt Intervention Bill really work?
People often ask: “will my debt be written off?” And while some people will qualify to have their debt written off, most people won’t.
Here are the basic rules:
- You have to earn less than R7 500. Remember this is the gross amount (the amount before deductions), so it’s not the amount that you get in your bank account every month.
- You can’t have debt that exceeds R50 000. If your debt is R55 000 then you don’t qualify, even if your salary is less than R7 500.
If I qualify, what do I have to do to get my debt written off?
Three possible things can happen:
- They will take a look at your salary and your debt to determine if you can afford to pay your debt with no interest. If you can, you will have to do that. In this case, it works exactly like debt counselling, so no advantage to anyone there.
- They will take a look at your salary and your expenses and determine whether you can afford to pay part of your debt every month, and part of it will get written off
- If you have no income, they can suspend your debt payments for a year
Here’s where it gets difficult. Every year, for the next three years, you have to be re-assessed and you have to prove that you still have no income. This means that each year, you need to go back and get an extension. If you don’t go, the whole thing falls away and you are no longer protected.
In other words, it’s not that easy to get your debt written off.
Who will be able to get their debt written off?
For one part of the population, this is the best news they have ever heard. We see these people often and who we can’t help. This is because something has happened in their lives which has turned it upside down. You could have had an accident and instead of earning R20 000 a month, you now earn R1 600 disability cover monthly. In this case, you are struggling to pay off your debts (which you could so easily do previously) and you have collection agents calling and knocking at your door all the time.
It’s these people that have no legal process to stop the continuous harassment from Credit Providers, Collection Agents and Legal collection firms.
For these people, this is the best law ever
For those who want their debt written off, if you are working and earning a salary, you might get some written off, but they might not write it all off.
What about fraud?
There is absolutely no-one in South Africa who can process an application for the Debt Relief Bill.
The regulations around this process have not been written.
The only people who have the right to do this is the National Credit Regulator and they have not started with applications yet.
So, while there is lots of excitement about debt being written off, most people won’t qualify. Some will have their debt written of partially, and others will have all of their debt written off.
Be aware, if anyone tells you they can help you and they are not working for the National Credit Regulator, then don’t listen.
If you don’t qualify, and you need help with your debt, contact RD Debt Counselling today.