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MONEY CLINIC | Can a debt management counselor place a consumer under debt supervision without a court order?

If the consumer is declared over-indebted by a debt counsellor, negotiations with credit providers to reduce payments and restructure the consumer’s debts will begin.


A reader of Fin24 wants to know if a debt counselor can subject a consumer to a debt review without a court order and if the consumer can use the reason above to end the debt review process. They write:

If a debt counselor does not have a court order to place a consumer under debt review, is the debt counselor allowed to continue the process? The over-indebtedness counselor does, however, have a Form 17.2, which informs creditors that the request for review of the consumer’s debt has been successful.

Based on the fact that there is no court order, law, can a consumer use this as additional/sufficient reasoning to evade debt review?

The consumer is no longer over-indebted. He is financially stable and wants to get out of the review of his debt; however, the debt counselor has found every reason to continue monitoring consumer debt. HHow can or should the consumer address this issue? Should he appoint a lawyer to defend his case?

The office of the National Credit Regulator respond :

If a debt counselor does not have a court order to place a consumer under debt review, is the debt counselor allowed to continue the process?

A consumer is subject to a debt review when he has applied for a debt review in the prescribed manner, pursuant to Section 86 of the National Credit Act.

What is the prescribed way? This means completing a Debt Review Application (Form 16) and/or Appeal Recording where the consumer gives consent.

If the consumer is declared over-indebted by a debt counsellor, negotiations with credit providers to reduce payments and restructure the consumer’s debts will begin. Debt restructuring must be confirmed by the Magistrate’s Court or the National Consumer Court (NCT) by court order or consent order.

The over-indebtedness counselor does, however, have a Form 17.2, which informs creditors that the request for review of the consumer’s debt has been successful.

An opinion 17.2 confirms the debt adviser’s assessment of a consumer’s over-indebtedness. It is the completion of a Form 16 and/or Appeal Record where the consumer provides consent that places a consumer under debt review.

Based on the fact that there is no court order, law, can a consumer use this as additional/sufficient reasoning to evade debt review?

No, the court order confirms the rearrangement of the consumer’s obligations under the debt review. It also helps credit grantors not terminate debt review accounts until the consumer defaults on the amount offered.

The consumer is no longer over-indebted. He is financially stable and wants to get out of the review of his debt; however, the debt counselor has found every reason to continue monitoring consumer debt.

The only time the consumer may opt out or be removed from debt review is when they have settled all debts under debt review except for a home loan, except provided he is not late. Subsequently, the consumer will be eligible for a clearance certificate.

Questions may be edited for brevity and clarity.