MONEY CLINIC | Can a debt counsellor place a consumer under debt review without a court order?

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If the consumer is found by a debt counsellor to be over-indebted, negotiations with credit providers for reduced payments and restructuring the consumer's debts will commence.
If the consumer is found by a debt counsellor to be over-indebted, negotiations with credit providers for reduced payments and restructuring the consumer's debts will commence.
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A Fin24 reader wants to know whether a debt counsellor may place a consumer under debt review without a court order and if the consumer can use the above reason to end the debt review process. They write:

If a debt counsellor doesn't have a court order to place a consumer under debt review, is the debt counsellor allowed to proceed with the process? The debt counsellor does, however, have a 17.2 form, which informs creditors that the consumer's debt review application was successful.

Based on the fact that there is no court order, by right, can a consumer use this as additional/sufficient reasoning to get out of debt review?

The consumer is no longer over-indebted. He is financially stable and wishes to come out of debt review; however, the debt counsellor has found every reason to continue keeping the consumer under debt review. How can or should the consumer approach this matter? Does he have to appoint a lawyer to represent his case?

The office of the National Credit Regulator responds: 

If a debt counsellor doesn't have a court order to place a consumer under debt review, is the debt counsellor allowed to proceed with the process?  

A consumer is under debt review when he/she has applied for debt review in the prescribed manner as set out in section 86 of the National Credit Act.

What is the prescribed manner? This means completing a debt review application (form 16) and/or the call recording where consumer gives consent.

If the consumer is found by a debt counsellor to be over-indebted, negotiations with credit providers for reduced payments and restructuring the consumer's debts will commence. The restructuring of debts must be confirmed by the magistrate's court or the National Consumer Tribunal (NCT) through a court order or consent order.

The debt counsellor does, however, have a 17.2 form, which informs creditors that the consumer's debt review application was successful.

A 17.2 notice confirms the debt counsellor’s assessment of a consumer’s over-indebtedness. It is the completion of a Form 16 and/or call recording where the consumer gives consent that places a consumer under debt review.

Based on the fact that there is no court order, by right, can a consumer use this as additional/sufficient reasoning to get out of debt review? 

No, the court order confirms the re-arrangement of the consumer’s obligations under debt review. This also assists with credit providers not terminating accounts from debt review for as long as the consumer does not default on the proposed amount. 

The consumer is no longer over-indebted. He is financially stable and wishes to come out of debt review; however, the debt counsellor has found every reason to continue keeping the consumer under debt review.

The only time the consumer will be able to withdraw or be removed from debt review is when he or she has settled all debts under debt review excluding a home loan, provided it is not in arrears. Thereafter, the consumer will be eligible for a clearance certificate.   

Questions may be edited for brevity and clarity.

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