Beware of misleading debt counsellors, warns NCR

Consumers are urged to be vigilant of debt counsellors engaging in the deceptive or misleading practice of placing consumers under debt counselling without their knowledge or consent. The National Credit Provider (“NCR”) said it received ‘’an alarming number of complaints’’ regarding this.

PICTURE: Pixabay

According to the NCR, some of the misleading trends leading to the consumers signing up for debt review without their knowledge or consent, include:

·        Consumers are contacted telephonically where they are offered assistance on debt consolidation or reduction of interests or instalments on their accounts. In other instances, the caller would claim to be calling from the NCR or working together with the NCR and the Government to assist consumers with their debts.

·        In most instances, callers already have consumers’ information in respect of their obligations, thus making consumers believe they are really working with the NCR and Government.

·        Consumers are misled to provide and/or confirm personal information telephonically with the understanding of providing same for something other than debt counselling (for e.g. debt consolidation or reduced interest or instalment on accounts).

·        Debt counselling application forms are sent to consumers via a link to their phone to sign electronically, and all information obtained telephonically is later transferred to the Form 16 or debt counselling application.

·        Some consumers only become aware of the debt counselling flag when they apply for credit, which is rejected due to the debt counselling flag.

The National Debt Counsellors’ Association reported that South Africans are owing about R2,5 trillion in outstanding personal debt with around R70bn- R100 billions of this outstanding debt belonging to consumers.

Speaking on Bush Radio’s Everyday People Show on Monday, Timmy van der Grijp National Credit Regulator’s legal advisor at the debt counselling department, said ‘’Debt counselling is designed to assist everybody to be able to pay their debt even if they are struggling at home, and to assist consumers and open dialogue to say ‘I have a problem, can we not meet halfway and pay the creditors back’, and being in a position to keep the household going.’’

Van der Grijp outlined the consequences for a consumer who unknowingly gets placed under debt counselling

‘’You are being counselled in the current debt to have rehabilitated in the future, but you have secured your assets, so the credit provider cannot take you to court and that is what makes debt counselling a good protection. When you are under debt counselling, you cannot take further debt, because it will increase the debt and cause the current debt to not be repaid.’’

On steps consumers should take if they receive unsolicited calls offering debt consolidation or reduction service, Van der Grijp said: ‘’There are good debt counsellors out there and is bringing value. As a consumer struggling, it is important to get to the right one. First step is to get a debt counsellor that is registered. Make sure there is an NCRDC registration number with four letters e.g.  NCRDC2345; check it out on the website; visit their offices to see if it is legitimate.’’

He advised consumers not to wait until the last minute. ‘’It gets to a tipping point where debt counselling is no longer an option for you, and if they cannot resolve it, then they will look at sequestration, which is something you do not want.  Speak to a credit provider, and if you cannot cope, then see a debt counsellor.’’

If you suspect that you may be a victim, for more information or to report this prohibited conduct, contact the NCR Complaints Department on 0860 627 627 or Complaints@ncr.org.za

Done by: Mitchum George