Thabiso wants to buy a car on credit but does not know whether she will be able to afford to pay the monthly debt. She already has many other debts that she is paying off every month and she wants to know whether she can reschedule these debts so that she can pay less each month but over a longer period. She has already received a Written Notice from a credit provider claiming that her monthly payments are irregular and she owes them money. She comes to you for advice on how to deal with her debt.

WHAT CAN YOU DO?

The steps below explain the process of helping Thabiso manage her debt, including working out her expenses and a budget.

1. EXPLAIN WHAT CAN AND CANNOT BE DONE TO HELP THE CLIENT

Explain what you can and cannot do to help Thabiso:

• Help her assess and manage her budget and debt responsibilities
• Help her understand the different legal actions that may have been taken against her if she fails to repay her debts
• Advise her of her rights and support her in claiming these rights
• Refer her to a registered debt counsellor as well as to the other institutions that govern the National Credit Act. Tell her that some credit providers choose only to work with debt counsellors and may not want to talk with you.

You cannot make a recommendation to the court to declare her over-indebted so that the debt can be re-scheduled by the court unless you are a registered debt counsellor.

2. RECORD INFORMATION ABOUT THE CLIENT

• Thabiso’s basic information
• Her debt and credit record
• Check if her income is more or less than her expenses
• Make as many copies of this as you need.

(See: Form for Recording Client’s Basic Information) to see what details you need to get from Thabiso.

3. DRAW UP A MONTHLY INCOME AND EXPENDITURE BUDGET

Before offering to help the client draw up a monthly income and expenditure budget, check that they are willing to do this. People may or may not be too willing to share personal information.

4. DEALING WITH DEBT QUERIES

If the problem is related to dealing with your client’s debt queries (See: Problem 6: Helping a person who has a problem with repaying debt.) If the problem is related to dealing with your client’s credit queries (See: Problem 7: Helping a person who has a problem with getting credit.)

Based on the budget you have drawn up and the debt your client has already, you may need to advise your client as to whether you believe they are eligible for credit, and whether it would be wise for them to borrow money. This would take into account all the expenses and debts and whether they would be able to pay the debts.

• Summarise what the main issues are and what your plan of action is
• Write down the steps you have taken to deal with the problem and all actions take

FORM FOR RECORDING CLIENT’S BASIC INFORMATION

Client’s surname: ……………………….. First names……………….

ID no:  ………………………..

Address:     ……………………………………………………………………

Contact numbers: home: …………………….   work: …………………………Cell: …………………………………….

Paralegal’s name:      ………………………………………………………….

Start date: …………………………………………………………………………

THE CLIENT’S STORY

Ask why the client has come to the advice office

(Use a blank page to record the main points of the client’s story)

CREDIT INFORMATION CHECKLIST

(Complete details for each debt)

Name of credit provider (organisation/person to be paid): ………………………………………………………………………………………….

Department/person to be contacted:  ………………………………………………………………………………………….

Street address of the credit provider: …………………………………………………………………………………………..

Postal address    ……………………………………………………………….

Phone: …………………………………………………   E-mail:  ………………………………………………

Amount of initial loan: ……………………………….   Period of loan: ……………………………….

Total amount still owing: ……………………………………………………………………………………………..

Amount to be paid monthly: ……………………….  

Number of payments still to be made: ………………

INCOME (Received each month)

R …………………………………………………………………

R …………………………………………………………………

R …………………………………………………………………

R …………………………………………………………………

EXPENSES (Must pay each month)

Rent:    ……………………………………………………………………………………………………

Electricity:     …………………………………………………………………………………………..

Phone:    …………………………………………………………………………………………………

Airtime:     ………………………………………………………………………………………………

Transport:     ……………………………………………………………………………………………

Groceries:     ……………………………………………………………………………………………

Toiletries:     …………………………………………………………………………………………….

Clothes and shoes: …………………………………………………………………………….

School expenses:  ……………………………………………………………………………….

Support of family members: ……………………………………………………………

Debt instalments: ………………………………………………………………………………

Donation to religious institution: …………………………………

Burial society or funeral policy: ………………………………………………………

Insurance:      …………………………………………………………………………………………..

Cigarettes:      ………………………………………………………………………………………….

Alcohol:     ………………………………………………………………………………………………

Sweets, cool drinks and other snacks: ……………………………………………

School fees:   ………………………………………………………………………………………..

Religious festivals, e.g. Christmas/Eid: …………………………………………….

Birthdays:      ……………………………………………………………………………………………

Weddings:      …………………………………………………………………………………………..

Initiations:      ………………………………………………………………………………………….

Funerals:     ……………………………………………………………………………………………..

Travel to visit family: ………………………………………………………………………..

TOTAL MONTHLY INCOME: R : 

TOTAL MONTHLY EXPENSES: R :

MONTHLY INCOME LESS EXPENSES: R :