I do not understand Debt Counselling fully????

[Gfacius]

Hi,
My wife and I have been on debt counselling since August 2011.
We have managed to pay our instalments of R10’171.18 every month.
We started falling behind from the end of Feb this year and paid about a week later (10 March)
Then again a late payment for the next month was also a week later.
Now May and June has not been paid at all yet as we simply do not have the full amount of R10’171.18 + R10’171.18
I emailed the debt counsellors to ask if we can pay whatever we can (as we get money through the month) to start catching up and if they can then pay these small amounts towards our cars and house to show the creditors that we are at least paying something for now. The answer I got was…
“Good day Gary,
Unfortunately the process does not work that way.
Payments need to be the full amount so when distribution takes place it’s a once off payment.
You will have to get the payments up to date as soon as possible to avoid your creditors terminating because if they want to terminate and we don’t have proof of the correct payments we cannot protect you.
Your other option is to sequestrate if you are struggling with the monthly payments towards the debt counselling.”
OK. So here is my question.
What is the point of Debt counselling if we HAVE to make the FULL payment each and every month. I mean, the whole point of being on debt counselling is that we are struggling with our debt. I think it is also because we work for ourselves and do not always have enough money at the end of the month as we don’t earn a fixed salary? So would it not be better for me to come off debt counselling so that I may pay something towards my cars and house bond?
Also I keep getting asked to take their sequestration product? This is worse because an investor would buy my house at an auction price (80%) less than market price from the bank and then I would have to RENT my house from the investor at almost the same monthly price as I was paying? And this would be disastrous in the fact that if I miss a payment then, the investor could kick me out and I’ll be on the street in no time.
I am really in a catch 22 situation and really need some serious advice. Also with the sequestration package I would be able to start paying for the cars with the finance companies as before? But I thought a Sequestration means that you cannot do this as everything in your personal portfolio would be scrapped and you would lose these financed items?
Please Help. I would rather just come off Debt counselling and make arrangements with my house Bond and 2 cars myself and pay what I can for awhile so they can see I am trying and then as soon as things pick up again, pay the full instalments?

I have a copy of the Sequestration Product if you need me to post it...

Any advice will do please.
Many Thanks.

[Just Gone]

I'm sure some people will give you advice here, but I would like to say one thing :- Make sure that the money that goes to the debt councillor is goint to the people you owe to - make sure of this every month, because I have a friend that has been paying a debto councillor for over a year and has just found out that the debt councillor is paying a minimal amount over - perhaps his fault as well, thefore just be aware !

[Dave A]

Now May and June has not been paid at all yet as we simply do not have the full amount of R10’171.18 + R10’171.18

Pay R10 171.18 now, and the next as soon as you can.

You really, really really need to try to stay with the schedule. As you are clearly aware, the consequences of the debt re-arrangement being cancelled are severe.

You work for yourself - make it happen.

[Blurock]

Hi Gary,

What business are you in? It seems as if the problem may start with the business not generating enough cash.

My question; is the business sustainable? Is there a way to increase profits and revenue?
Do a health check on the business and see if it is possible to collect outstanding debts and to reduce stock to generate cash into the business.

[murdock]

the way i see debt councilling...as a legal for of loan sharking...at the end of ther day all you do is add more interest onto whatever outstanding debts you already have.

my wife was advised to go for debt councilling...instead she sat down took all her problems...put them onto a spreadsheet and boy where there lots (credit cards...petrol cards...vehicle hp...personal loans)...worked out what she could afford...sent all the people she owed money to an email...with a payment plan...that was end of last year...she has since paid off her car and by the end of this year would have paid off every single credit card...personal load...petrol card...clothing account you name it...without the addtitional interest and cost of a loan shark (debt councillor)...we are talking over R100 000 worth of debt.

she still gets calls every month because she is not paying the full amount outstanding...but "pays the same amount every month"...some of the Aholes try bully her...but as i advised her...so long as she pays every month the same amount there is really nothing they can do...been down the loosing everything road once before and boy did i learn a trick or two.

as soon as you sign something and commit to it with these loan shark...you screwed...just remember like anything in life there is no such thing as a free ride...and people cant pay salaries unless they are making money...so unless a debt councillor is receiving grants from the goverment...they must be making money out of somebody...if you think i am making it up go look at your debt councillors house...vehicle he/she drives and which private school their kids go to.

[Blurock]

I agree with Murdock. Debt consolidation, debt counselling, it all works out expensive due to fees and additional interest. There are instances where debt counselling may prevent the creditors from pouncing and attaching your assets, but as a rule you can sort it out yourself. The only thing is you MUST have discipline and stick to your arrangement.

Do not incur new debt. Pay off the high interest items first. Play open cards with your creditors. See the warning signs early and ask for help. Do not wait until things get out of hand and then expect a bailout.

I have yet to see a bank or creditor turn someone away when they play open cards and show an intention to pay, although late.

[murdock]

they do try bully you...call you all hours of the day and night...but in reality there is nothing they can do if you just pay what you agree to...every single month.

the best advice i could ever give anyone...reduce your credit limits...to an amount you can manage...i am not saying dont have credit cards or clothing accounts...just make sure they are within your limits...and when their credit department calls you or sends you a message to tell you your limit has been increased...get back to them and tell them to keep it.

my credit card started off at R1000 and when i looked again...a couple of years later it was sitting at over R50000 in the red...plus all the other limits which where slowly increased over a period of time...when i looked again i was in over R200 000 worth of debt in cards and loans ...not including my bond or vehicle hp...and sinking fast...i got stuck in worked 20 hours a day...7 days a week for 2 months and made a little more than i owed everyone...as soon as i got paid...i paid out the entire amount and at the same time reduced all my limits to manageable amount....i have noticed they have been slipping again...but will address the issue shortly...in fact this time i will be reducing limits to around R1000 max.

[theDCI]

I am surprised that you can even say the above and have not been reading the news of late especially yesterdays Cape Times Headline, "banks are greedy financial monsters"...
If anyone thinks that debt counselling does not work, it is because many credit providers do not want it to work and in fact, most press reports have only given a very one sided story. Yes there have been some bad debt counsellors who have stolen consumers money. But please show me any other profession where this has also not occurred. It happens in every profession and if consumers knew their rights, enforced their rights, and ensured they also took accountability for their debt by asking their debt counsellors for proof, most of the problems with the "bad apples" within the debt counselling industry would be no longer.

Gfacius please do yourself a favour and take note of these facts. Please also do visit www.thedci.co.za and you are more than welcome to email me directly off the site so that I can help you.
1) Is is law that consumers must make payments monthly as per the agreed amount as your entire proposal to the bank is based on these figures
2) Yes, you can pay in at different times of the month and yes you may also get your debt counsellor to send out a 17.3 informing your credit providers that late payment will be made, or that there has been a change of circumstance. You must however also inform them of how you will catch up on your payments.
3) Point 2 CANNOT happen every month
4) Debt Counselling is the last resort before sequestration. If you cannot pay monthly you must sequestrate. If you do not sequestrate and the banks sell your house, you are liable for the shortfall. If you sequestrate, all your debt is cleared.
5) NEVER pay monthly into any debt counsellors account for your monthly payments. It must be with a Payment Distribution Agency, that is registered with the NCR.
6) Download the Consumer Safety Checklist For Dealing With Debt Counsellors from www.thedci.co.za under consumers / documents and contacts / documents no 12.
7) There is no other profession in South Africa, that has saved the tens of thousands of homes, cars and lives as that of the Debt Counselling Industry. I will challenge any person with facts on this one, because this is the truth, but unfortunately, it is SA's best kept secret...why because your creditors do not like you being in debt review. You only need to look at this link, read the comments to see the truth http://www.gopetition.com/petitions/...bad-faith.html
8) theDCI is the only site in SA that gives you information without the sugar coatings of many other sites - why, because we fight for consumers rights, education while trying to help empower DC's further by exposing the truth of this industry in the press.
9) Also go see www.facebook.com/theDCI read all the press articles to see what I am talking about in the above comments. Alternatively, you may contact me on info@thedci.co.za
10) If you come out of debt review please understand that your creditors will charge you ALL the arrears interest and charges pertaining to your debt. They will demand that you pay all at once. If you don't, they will issue you a summons, and if they promise you they will not, you can pay them off, I can give you hundreds of people who can tell you the truth of what the banks did to them, once they came out of debt review after trusting what they were told.

Know all the facts before you stop making your monthly payments. Do not listen to people who are not specialised as debt counsellors and who are not in the industry for a few years, as it is not their assets in question, therefore easy to give very poor advice.
It is not just a bond and asset finance that we are talking about, it is about YOUR FAMILY HOME AND CAR which enables you to produce an income as well as transport your family from point A to point B safely.
Take a look at the information and links I have provided you with - these are the real facts.

[theDCI]

the way i see debt councilling...as a legal for of loan sharking...at the end of ther day all you do is add more interest onto whatever outstanding debts you already have.

my wife was advised to go for debt councilling...instead she sat down took all her problems...put them onto a spreadsheet and boy where there lots (credit cards...petrol cards...vehicle hp...personal loans)...worked out what she could afford...sent all the people she owed money to an email...with a payment plan...that was end of last year...she has since paid off her car and by the end of this year would have paid off every single credit card...personal load...petrol card...clothing account you name it...without the addtitional interest and cost of a loan shark (debt councillor)...we are talking over R100 000 worth of debt.

she still gets calls every month because she is not paying the full amount outstanding...but "pays the same amount every month"...some of the Aholes try bully her...but as i advised her...so long as she pays every month the same amount there is really nothing they can do...been down the loosing everything road once before and boy did i learn a trick or two.

as soon as you sign something and commit to it with these loan shark...you screwed...just remember like anything in life there is no such thing as a free ride...and people cant pay salaries unless they are making money...so unless a debt councillor is receiving grants from the goverment...they must be making money out of somebody...if you think i am making it up go look at your debt councillors house...vehicle he/she drives and which private school their kids go to.

Murdock - you should know your facts before making such comments on a live forum which are clearly false and defamatory. I invite you to come and sit in my office or any other debt counsellors office for one week to see the truth of what really occurs.

[Dave A]

if consumers knew their rights, enforced their rights, and ensured they also took accountability for their debt by asking their debt counsellors for proof, most of the problems with the "bad apples" within the debt counselling industry would be no longer.

Damn - if only that were true.

This case of debt counselling gone wrong has been vigorously followed up, and all I've seen is a lot of shuffling feet and no accountability from the debt counselling industry and its regulators.

[Gfacius]

Hi Kevinb,
Thanks for the reply!
Yes they are paying the creditors as they send me a statement every so often to show the payments. Also I haven't heard anything from my creditors yet.

Thanks though and I will keep checking!

[Gfacius]

Thanks Dave A,
I agree and that's what worries me. The consequences would probably be severe but you cannot squeeze water from a rock.
Okay, well not at the moment anyway. I know that my business will pickup soon. But how do I show the creditors this if I am on Debt Counseling?

It seems as if the Debt Counselors are no longer interested in your problems once they have received their money which was all upfront. All I get from them is "Good Luck" and "Sequestration"

[Gfacius]

Hi Blurock,

Thanks for your concern and valuable advice.
I definitely agree it is due to the business. Probably my fault too as I am the business.
I do "glass bonding" ie. UV Bonding is a process whereby, typically two pieces of glass are glued together using a UV curing adhesive, which is cured by either a UV light or UV activator. So I do showcases to all kinds of problems people have out there and also deal largely with shopfitting companies.
I have a website and most of my business comes from them finding me on Google. I have also patented 3 swimming pool products one of which is called the "Stealth Filter Buddy". However, the big boys are keeping me out and the patent fees have definitely put a strain on my uvbonding business. At this stage "Stealth Pool Products" is being De-registered by Cipro as my accountant decided not to do the annual returns anymore as there was no money coming in to the business for awhile now.

The big shame in all this is that It is definitely a great product and facilitates in the cleaning of the weir basket. All users so far have given good reviews and have sworn never to use the old type again.
Builders Warehouse were keen to have it as there product but have never approached me again and I think it was politics mixed with Mass Mart.

Life is just not fair and I am fed up.

One of my friends works for OMSA (Operational Marketing) and is trying to get me to do some more Siemens electrical 'light current' installations for them. This definitely helped last year when I did a big installation for Savuka Gold Mine.
If I could just do more of these I would be out of the poop in no time.

My wife and I also started a website design and hosting company but is still in the infancy stages and requires more time to grow. It almost feels like I am fighting against time. It's as if you fall of a ship and are busy drowning. You know the ship is turning around because you can see it but it feels as if it won't be in time.

[Just Gone]

you should know your facts before making such comments on a live forum which are clearly false

DCI ....... you seem quite arrogant with your postings at Murdock ............... well for your info the FACT is ......... a friend of myne paid monthly to a debt consolidation company who did not pay the correct amount over to the people he owed money to - they paid small amounts just to keep them quite and has ducked with the rest of the money !!!!! So that is the fact - which is not "false" as you state !

[Gfacius]

Hi DCI,

I do agree with you and probably don't give credit to the debt counselors or the system as I should.

Starting at the beginning, it did help me when we just started out as we didn't have to pay the first monthly payments when we first went on to Debt Review.

My problem now is simply this. At that stage my accountant gave them a letter to state that I am earning R20'000 per month. In fact this has changed considerably. What happens now? Can they amend or re negotiate the initial agreed payment schedule because my situation has changed for the worse. I don't know and it seems like a mountain in front of me because I, number one, don't have the time because I am busy running around closing holes where I can and trying to get more business to stay alive. And number two, feels as if they won't do it because they want to make more money from me by their Sequestration Product which will cost me a further R15'000.

So at the end of the day I feel as if I have sealed my own fate and wish I had never gone that route and rather did what Murdock suggested and that is to have played open cards with my creditors? In fact I did do this for awhile but eventually I started missing my agreed payments here and there and fell further behind.

I definitely agree with Blurock, this is a "Own Business" generated problem and seriously need to get more business and quickly...

I have since cut my DSTV off, gone to Outsurance for a lower insurance premium, stopped my household insurance etc. I also now plan my jobs and routes to save on petrol.