3 Important Debt Review Questions

People in debt review often encounter procedural problems and mistakes that make matters worse. Credit providers (CPs) may give the impression everything is the debtor’s fault. Closer examination reveals that CPs make their share of mistakes and have a habit of blaming others.

 

Here are some frequently asked questions and some possible explanations:

Why does my CP harass me when I have made arrangements to pay?

This is often the result of miscommunication between a bank’s debt review department and its product divisions (credit card division, bond division, personal loan division etc). The departments often don’t talk to each other.  A product division sees only that the client is late with a monthly payment and is unaware the customer is under debt review and the account has been restructured.

The bank’s system may not have been updated and product division staff may not have read their emails. After all, their primary job is to push their products.

Note, however, if you are under debt review, the CP is not allowed to contact you about your debts more than three times a week, and only then during office hours, Monday to Friday.

Why did the PDA not pay the creditors?  

The payment distribution agency (PDA) has the mandate to make repayments on behalf of an individual under debt review, but incorrect information can cause problems.

For instance, the bank may have updated or changed the client’s account from a normal account to a ‘legal account’ indicating the client is under debt review. The bank generates a new account number, but might not tell the PDA.. The PDA continues to use the previous account number. As a result, no payment is reflected on the account that is owed the money. The payment goes into the wrong account.

 

Why do I still get a summons when a court order has been issued?

A court order confirming a debt review and debt restructure should lift the threat of a summons, but a bank might still take out one. This causes some to accuse the bank or CP of acting in bad faith. An alternative explanation involves the time-lag between the last update of the CP’s system and the issuing of the court order.

A CP may be slow to input the new information. In contrast, a debt counsellor (DC) will usually start the debt restructuring process as quickly as possible.

On receipt of a summons, a customer will often contact the CP, who may then blame the DC for non-performance or might even imply the DC has simply taken the client’s money.

When this happens, the debtor must continue to make repayments while informing the DC.

If a court order is in place, a summons cannot be legally enforced unless the order has been rescinded. Overturning a court order is almost impossible if agreed repayments continue to be made.

The debtor can escalate the matter to the Head of Complaints at the National Credit Regulator. To confirm repayments are being made, request a PDA report from your DC or produce monthly documentation from the PDA.