Ms Siswe, a single parent, works as a domestic worker earning R3 500 a month. Every month she also gets R1 000 for maintenance from the father of her two children making her total income R4 500 per month. Ms Siswe’s expenses are R5 500 per month. She comes to see you as she is unable to pay all her debts on time. She is particularly worried as she has just received a written notice from a clothing store to say she is behind with her payments.

WHAT DOES THE LAW SAY?

When consumers are unable to fulfil their repayment obligations, the NCA describes them as being ‘over-indebted’. In such cases, they should apply to a debt counsellor to have the debt reviewed. The alternative to this is either to approach the credit provider to try and make an alternative repayment arrangement or for the credit provider to take legal action. (See Debt counselling)

WHAT CAN YOU DO?

• Make a list of her debts and draw up a budget with her (See Problem 5: Helping a person assess their financial situation and drawing up a budget, Steps 1 – 3).
• Ms Siswe is over-indebted. Discuss her options:
  • Go and see the people she owes money to and ask for a change in the repayment terms so that she can pay smaller amounts over a longer period (but she is sure that they will not listen to her).
  • Apply to a registered debt counsellor to have her debt reviewed.
• Give her the details of a local reputable registered debt counsellor. Ms Siswe must make an appointment to see her.

APPLYING TO THE DEBT COUNSELLOR

At the debt counsellor Ms Siswe explains her situation. The debt counsellor does a debt review by asking about all her debts and her income – which she then assesses. Ms Siswe gives the counsellor a copy of her budget and list of debts.

The debt counsellor agrees that Ms Siswe is over-indebted according to the Act, and makes calculations of new repayments that Ms Siswe can afford.

The debt counselor agrees to approach the credit providers to try to reach a debt agreements with them. She does this but the creditors do not want to do this – so the debt counselor arranges to go to court.

The court declares Ms Sizwe over-indebted and orders that the debt be restructured.

Ms Sizwe is told that she may not borrow any more money until this debt has been paid off. She understands that the credit bureaus will have a record of her financial situation on their records until she has paid off her debts. Every month, she pays the agreed amount of money to her credit providers.

After Ms Siswe has paid all her debts she receives a debt clearance certificate from the debt counsellor to prove that she has finished paying all her debts. As she doesn’t want her negative listing to remain on the record of the credit bureaus, she follows the debt counsellor’s advice and applies to have this information removed from the credit bureau’s records.