Debt Review – How it works – Part 3
The Payment Distribution Agencies (PDA’s)
The payment distribution agencies are companies that distribute consumers funds for them. You won’t find them mentioned in the NCA at all but the National Credit Regulator thought it would be a good idea. They have encouraged Debt Counsellors to use the services of one of these few companies. They also encourage consumers to do the same.
The PDA’s normally collect one debt review payment from the consumer (who maybe has set up a debit order for this) each month and split the payments up to each of his creditors. They get instructions from the Debt Counsellor on how to split the money up but they don’t let the Debt Counsellor or anyone else touch the money. They then make the payments to the creditors. They send proof of the payments to the creditors. It is important to note that many creditors still cant seem to track when money comes in for some reason. Many of the biggest banks struggle with this simple procedure. So be warned the creditors may call you about payment even if they have received funds.
Many Debt Counsellors spend much of each day trying to help the PDA’s prove to the creditors that payments were made.
Any interest that is earned on money in the bank at the PDA’s is paid over to the National Credit Regulator rather than to the consumers or creditor’s accounts. The Payment Distribution Agencies are then required by the NCR to send consumers a statement of the payments. Not all PDA’s are getting this right. If you are not getting a regular statement monthly from yourPayment Distribution Agency then you can complain to the NDMA about it or to the NCR or the Banking Ombud.
Paying up your debts:
Once one debt is paid off the amount you pay each month will not change (reduce). It stays the same but the amount each creditor that is still left, gets increases a little bit. This happens each time a debt is paid up and soon all or most of your debts will be gone. Most plans for debt review are around 5 years long. % years might seem like a long time but most creditors collect smaller debt over 2 years anyway and the amount you pay over 5 years (or however long your plan will be) will be manageable if you stick to your budget each month.
Once all your debts are gone the Debt Counsellor will issue a thing called a Clearance Certificate. This is sent to the credit bureaus and they will then clear your record of the debt. Therevare still some teething issues with these but the idea is this is a piece of paper that says your debt is paid up. Beware that many Creditors can’t even track regular monthly payments so don’t be surprised if they give you a hard time as to whether your debt with them is paid up.
And that’s a rough idea of what debt review is all about.
So take that first step. Simply call us directly at 086 111 3749 or contact our supportive debt counsellors via our contact page. Dont have the time? Request a Free Call Back and one of our counsellors will contact you! Zero Debt is a certified Debt Counselling company.