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When a consumer applies for debt counselling, the debt counsellor will review and evaluate the consumer’s financial position in order to determine if the customer is over-indebted. A consumer is over-indebted when he/she cannot meet his monthly debt obligations after all his/her basic monthly expenses have been paid.

The debt counsellor will notify the consumer’s creditors that he/she has indeed applied for debt counselling. The debt counsellor will notify each creditor with a legal notice called a 17.1 Notice. From this moment creditors are not allowed to take any legal action. During the next 60 days, creditors must negotiate with the debt counsellor to determine a new repayment plan for the consumer.   

If the debt counsellor determines, during the debt review process, that the applicant appears to be over-indebted, he will commence with a procedure to notify all the consumer’s relevant creditors of this conclusion. This is done with another legal notice called a 17.2 Notice. The 17.2 Notice will give confirmation of over-indebtedness and the new repayment proposal will be sent to the creditors.

The debt counsellor will then, on behalf of the applicant, enter into a process of negotiation with these creditors in order to negotiate reduced (more affordable) monthly repayments on behalf of the applicant. Reductions of as much as 60% can be seen. There are however no definite guarantees.

All debt counselling applications end in court. This is to get a consent order for the new agreement. The consent order insures that the creditors stay to the new repayment arrangement and may not take legal action. It also gives the creditor peace of mind that consumer will keep to the new arrangement to pay each month and not skip or short pay on monthly repayments at any time.

The debt counsellor must get a court date within the first 60 working days of the debt counselling application. The debt counselling application will not be finalised until the consent order is granted. In many instances there is a big backlog in Magistrates Courts, so the chances are good that the court date will not be within 60 days. It is however the Debt Counsellor's duty to ensure that the date is obtained before the 60 day expiry.

The intention of the NCA was not that all applications end in court, but because of a new directive in 2009 this has changed. This has caused that applications take much longer than the initial 60 working days intended by NCA.

The consumer starts making payments from the first pay date after the application. All consumers are protected after the 60 working days as long as monthly payments are made to the Payment Distribution Agency. Creditors may not cancel the debt counselling after the 60 working days as long as the consumer keeps to new repayment plan.

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