System to standardise debt review

The National Credit Regulator (NCR) has introduced a new system to standardise the way debt counsellors assess over-indebted consumers, it said on Wednesday.

“The Debt Counselling Rules System (DCRS) aims to address concerns of inconsistency in the way debt review proposals are determined and improve the solve rate of proposals through consent agreements,” the NCR said in a statement.

The NCR set up a task team to look at bottle-necks in the debt review process and it found that inconsistencies in the programmes used by debt counsellors to come up with debt review proposals were a problem.

The National Credit Act provides for over-indebted consumers to use a debt counsellor to apply to restructure their repayments to their creditors.

If accepted by credit providers, then the consumer’s most valuable assets will be protected from repossession.

“In the past, there was no standardisation in the way proposals were drawn up and cases would often end up in court with obvious negative consequences for both consumers and credit providers,” said Ismail Kharwa, acting debt counselling manager at the NCR.

The rules in the system relate to different formulas used by debt counsellors to see whether a consumer can be rehabilitated.

Debt counsellors do not have to use the system and credit providers do not have to accept debt review proposals that have been approved through the DCRS.

However, it would make it much simpler for credit providers to assess applications. - Sapa