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  Legalwise Wiseup  
  31 January 2018  
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Exit this way: can you cancel debt counselling?

Zoya is struggling to pay all her debts, which includes a home loan, and wants to go under debt counselling. She only wants to be under debt counselling until she is back on her feet and has a new job.  Zoya wants to know if she will be able to cancel debt counselling in the future.

  • It is possible for a consumer to cancel debt counselling in certain instances, such as after getting a clearance certificate from the debt counsellor.
  • A consumer must find out which of the following two scenarios applies to him/her:
    • If there is no court order placing him/her under debt counselling:
      • The consumer can inform the debt counsellor in writing of his/her desire to cancel the debt counselling.
      • This can only be done before a formal notice is sent to the creditors, saying that the debt counsellor has found that the consumer is over-indebted.
      • The consumer must pay the debt counsellor’s fees before the debt counselling can be cancelled.
    • If the formal notice has already been sent to the creditors or there is a court order:
      • The consumer must apply in court to cancel the debt counselling proceedings and for the court to declare that s/he is no longer over-indebted.
      • If the application is successful, the debt counsellor must give notice to all of the creditors of the cancellation.  

Zoya wants to know when she can ask the debt counsellor for a clearance certificate in order to cancel the debt counselling.

  • A clearance certificate is a letter given by the debt counsellor in the following instances:
    • when all the debts that formed part of the debt counselling has been paid in full; or
    • when the consumer can show that:
      • s/he is financially stable and can, in the future, pay the outstanding debts under long-term credit agreements that formed part of the debt counselling, such as a home loan;
      • the long-term credit agreements that formed part of the debt counselling are paid up to date, but it does not have to be paid in full; and
      • all other debts that formed part of the debt counselling, except for the above, have been paid in full.
  • The debt counsellor must issue the clearance certificate within seven days and it can then be used when the consumer applies to cancel the debt counselling.
  • If the debt counsellor fails or refuses to issue the clearance certificate, the consumer can apply to the National Consumer Tribunal (“Tribunal”) to review the decision, and the Tribunal can then order the debt counsellor to issue the clearance certificate.
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  Inside this Issue no 12  
Letter from the CEO
Legal Expenses Accidental Death Benefit
Getting to know the debt counsellor and the consumer
Actual case: Nedbank Limited v Jones and Others
Exit this way:
can you cancel debt counselling?
What is an Administration Order?
What is an Emoluments Attachment Order (“EAO”)?
What is a Will?
Empowering the community of Zandspruit through financial literacy
Frequently asked questions
Making it easier for you to keep in touch
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