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Thursday, August 26, 2010

Magistrates to be trained on the debt counselling process

Judicial Officers Association of South Africa (JOASA) in collaboration with the NCR and Justice College will host a conference to be attended by about 140 magistrates on Saturday, 28 August 2010.

The morning session of the conference is dedicated to the National Credit Act (NCA), with specific emphasis on the debt counselling provisions. This session will assist participants to understand the debt counselling process, challenges faced in taking matters to court including initiatives that have been put in place, such as the recommendations of the Task Team on debt counselling to address backlogs in the court system.

Magistrates play an important role in the debt review process as they interpret the National Credit Act, grant consent orders for consumers to enter the debt review process and also grant judgments against consumers who are unable to pay back their debt.

President of the Judicial Officers’ Association of South Africa, Dario Dosio says the session will help magistrates to better understand the NCA and the debt counselling process. “One of the challenges magistrates face is that debt counselling is just one area of specialisation in the civil courts,” says Dosio. “The training gives them an opportunity to understand the main role players, objectives that the National Credit Act is trying to achieve and to try and help indebted consumers where possible.”

Debt counselling applications make up an increasing proportion of magistrates’ work. As at the end of July 2010 over 190 000 consumers had applied for debt counselling with an average of 7500 new applications being received each month. A Task Team convened by the NCR recently found that a lack of capacity and delays in the Magistrates Court caused by uncertainty around the interpretation of the relevant sections of the National Credit Act were creating bottlenecks in the debt review process.

In August 2009, the NCR obtained a High Court Declaratory Order which gave clarity on the interpretation of a number of contentious sections of the Act. Since then, the volume of cases processed through the Magistrates Courts has increased significantly, but the backlogs remain high. “The quicker debt review cases can be dealt with in the Magistrates Court, the quicker over-indebted consumers can get back on their feet,” says Peter Setou, Senior Manager: Education & Strategy at the National Credit Regulator.



The courts are a critical element in the smooth functioning of the debt review process. When consumers are unable to pay back their debts, they can approach a debt counsellor who negotiates with credit providers to reschedule their debt repayments. Should all parties agree, then the debt counsellor can approach the courts for a consent order. However, if a credit provider does not agree to the new terms, the debt counsellor still needs to refer the matter to court for a hearing.

“Without the protection of the debt review process or the matter being before court, consumers face the risk of their assets being attached by credit providers who seek to recover their debt”, added Setou.

Setou says it is important to remember that credit providers cannot terminate the debt review process and recover an outstanding debt if the debt counsellor has referred the debt review case to a Magistrates Court for consideration.

“Magistrates do try to follow the spirit and intention of debt review as defined in the NCA and therefore do act in the best interest of over-indebted consumers,” says Dosio. “They will consider various aspects of each case, such as whether the proposed restructuring plan is reasonable.”

“The Conference is the culmination of separate workshops which have already been successfully held in the Free State, Western Cape, Gauteng and Kwa-Zulu Natal which reached in excess of 300 magistrates. The NCR plans to roll out the workshops to more of the country’s 1800 magistrates, concluded Setou”.

Thanks to Bullion PR & Communication

Wednesday, August 25, 2010

FNB & 17.4s

Are you experiencing any difficulty with FNB and 17.4's?

If so please let us know on:
magazine@debtcounsellingsa.co.za

Sunday, August 15, 2010

Quarterly Report Due

To all DC's:

Please remember that the NCR are waiting on your Quarterly report on Sunday the 15th August 2010


Please note that this is for the 2nd Quarter of 2010
(not third Quarter as indicated by mistake in this month Debtfree DIGI)

Thursday, August 12, 2010

What rate will you get?

Rob Lawrence, national manager of Rawson Finance says that:"The position of the average bond applicant,is that 45% will still find their applications rejected and those that are approved can count themselves fortunate if their bonds are awarded at 0,5% or 0,75% below prime. High-risk applicants – those with a poor debt or employment record – may well find themselves paying 1% to 2% above prime."

Wednesday, August 11, 2010

Lying about your income is Fraud

Wendy Zulu, head of Risk and Compliance at FNB Home Loans, says the bank has seen “a concerted effort in relation to mortgage crime”. “These take on various forms, but the main ones are inflation of income, identity theft, false employment records, failure to disclose other debt obligations, inflating the value of the property and/or price to be paid.”

Berry Everitt, CEO of the Chas Everitt International property group, warns:"never to be cajoled into making false statements on loan applications, including overstating your income, understating your debt, or lying about the source of your deposit or the nature and length of time of your employment. If the person helping you make an application insists that ‘everyone else does this’ or that it is ‘quite legal’, ask them to put that in writing. You can be sure it won’t happen!”

Mz. Zulu warns that such transgressions (inflation of income etc.) will be met with grave consequences. “We institute criminal charges against them, cancel the mortgage agreement (if applicable) and list the fraud on ITC.

Sunday, August 8, 2010

NCR wins case against reverse mortgage operator

In a boost for consumer rights, the Free State High Court has ruled in favour of the National Credit Regulator (NCR) in its case against Brusson Finance (Pty) Ltd, a company which used the so-called “reverse mortgage“ system of money lending which resulted in a number of consumers loosing their homes.


The NCR instituted proceedings in the Free State High Court, together with two borrowers, Mr and Ms Ditshego, who had lost their home to the scheme, against Brusson. This was as a result of receiving various complaints from consumers in respect of loans concluded with Brusson and an investigation into the company’s business activities.


Adv. Jan Augustyn, Manager for Investigation & Prosecution at the National Credit Regulator said that “the investigation revealed that Brusson was an unregistered credit provider that targeted blacklisted, cash strapped members of the public, who cannot obtain loans and/or financial assistance from reputable credit institutions due to bad credit records. Brusson granted loans on condition that the consumer owns immovable property with substantial equity available in the property”. The Brusson scheme operated as follows:

* Consumers react to Brusson’s advertisements and approach Brusson for a loan;
* Qualifying consumers then have to sign Brusson’s application form as well as blank property transfer documents simultaneously, which consisted of an Offer to Purchase (giving effect to the sale of the consumer’s property to the investor), Deed of Sale (giving effect to the “re-purchase” of the property by the consumer from the investor) and a Memorandum of Agreement (constitutes an agreement between Brusson, the investor and consumer);
* Brusson then source so called investors (this process can take several weeks), with clean credit records and a steady income;
* The investors then apply (with the assistance of Brusson) for a mortgage bond to be registered over the property in question from reputable credit institutions. The new bond amounts includes the following:
o cancellation amounts of existing bonds plus cost;
o loan amount required by member of the public;
o bond transfer and registration cost;
o arrear rates, taxes and utilities on the property;
o Generous fee to Brusson and an investor’s fee.
* The borrowers had to make payment of this “re-purchase” price within 24 months, over and above an amount payable as consideration for his occupation of the property at issue. It was always inevitable that the consumers would default in their payments as per the agreements concluded by them.


“When the borrowers inevitably failed in this agreement, a third agreement (Memorandum of Agreement) provided that the investor must proceed to cancel the “re-purchase” agreement with the borrower, and that the investor has to sell the property to Brusson for the original purchase price. Brusson invariably became the owner of the property, after “buying” the property for an amount far less than the actual market value, added Augustyn”.


The NCR sought declaratory relief that the Brusson scheme was contrary to the provisions of the National Credit Act (NCA), and offended the common law in South Africa. Brusson opposed the application and contended, amongst others, that it was permissible to enter into separate agreements, which were linked and interdependent and that it did not mean that an inference could necessarily be made to conclude a credit agreement. Brusson further contended that it was nothing more than a broker and could not be construed as a credit provider as envisaged by the National Credit Act.


However, Mr Justice Jordaan ruled in favour of the NCR and the Ditshego’s and found that:

1. Brusson, in partnership or association with so-called investors, lent money to borrowers;
2. The inter dependent agreements purports to be a valid agreement of sale, but it was clear to be not. The true nature of the agreements was indeed a simulated credit transaction;
3. Brusson therefore provided credit and as such, should have registered with the NCR;
4. The agreements concluded were illegal and void in terms of section 40(4) of the National Credit Act.

The court ordered Brusson to effect transfer of the property back to the Ditshego's.


“This judgment accords with the NCR’s view that the so called “reverse mortgage” system of money lending falls within the realm of the National Credit Act, and accordingly, consumers are entitled to the protection afforded by the Act when entering into such a transaction,” says Augustyn.


Augustyn said “the NCR applauds the judgment as it reiterates the fact that people or entities involved in these types of schemes do not only face possible criminal investigation and prosecution but also a court order declaring that the agreements concluded are illegal and void in terms of the National Credit Act”.


Subsequent to the court order granted in the Free State High Court the NCR further successfully intervened, as co-applicant, in the winding-up of Brusson. Both the applications were made on an urgent basis in the North Gauteng High Court. “The court granted an order that Brusson be provisionally wound up, calling upon interested parties to show cause on or before 16 September 2010 at 10h00 as to why Brusson should not be finally wound up”.


“The effect of the court order for consumers is that Brusson will not be able to alienate or deal with assets as the same will fall under control of the Master of the North Gauteng High Court. Provisional trustees will be appointed and they will be able to, amongst others, investigate the affairs of Brusson and deal with claims against Brussons’s estate, added Augustyn”.


“The NCR has now through its actions obtained legal clarity as to the validity of the agreements concluded by the consumers in the Brusson scheme. The Legal Recourses Centre graciously offered to provide further assistance to consumers prejudiced by the Brusson scheme”, concluded Augustyn.

Wednesday, August 4, 2010

Get More Wear Out of Your Clothing

We all know how expensive new clothes can be and when times are tight you will not have money to spare on new clothes every month.

Here are a few tips on how to preserve your clothing for longer.

1. Wash Less Often, and Only in Cold Water

Many of us are guilty of over laundering our clothes, which costs time and money and is usually unnecessary. Washing and drying is often actually harder on clothing fabric than wearing it! Consider wearing apparel items more than once between laundering, and wash most clothing in cold water only; cold water costs less, is gentler on fabrics, and will get most clothes just as clean. But remember if it smells...it's time to wash it.

2. to Bleach or not to Bleach...

Bleach can cause clothing to disintegrate more quickly. If you need to brighten white clothes, try using baking soda and hot water instead.

3. It Pays to Get Hung Out to Dry
Clothes dryers not only cost a lot to own and run, but they cook and beat the life out of your clothing too. Drying your clothes on a good old-fashioned clothesline can increase the lifespan of some garments by as much as fifty percent.

4. Catch them while they are small

Most rips and tears start out small, so check your clothes carefully after every washing to catch and mend snags while they're still small and easy to fix.


5. Zip Up Before You Wash up

Metal zippers on jeans, jackets and other apparel items are like tiny chainsaws in the washer and dryer, ripping away at other clothes the whole time unless you zip them up first.

6. Soggy Shoes

The lifespan of Shoes is often cut short by the effects of moisture, even more so than by pounding pavements. To make your shoes last longer, don't wear the same pair every day. Give each pair at least a day in between wears to dry out from the moisture they absorb from your body and the environment. Frequently shining or sealing shoe leather helps protect it from moisture as well.

Tuesday, August 3, 2010

Least Cooperative Creditor ?

Who would you say is the least cooperative Creditor (out of the big boys) when it comes to Debt Review?

Submit your answer to: magazine@debtcounsellingsa.co.za