A code of conduct released this week between credit providers and debt counsellors is expected to significantly improve the debt counselling process and possibly puts South Africa at the forefront globally in dealing with over-indebtedness.
An estimated 8-million South Africans are indebted with 110 000 people under debt review making debt repayments of R214-million a month with total outstanding debt at R40-billion of which 75% is made up of mortgages.
Every month a further 7 000 people apply for debt counselling. There are 92 000 people whose home loans are now delinquent and face repossession.
The codes of conduct seek to streamline the debt counselling process by standardising the content of debt proposals and payment plans; establishing an ombudsman scheme to resolve disputes; and providing clear guidelines for debt counsellors to determine whether consumers are able to afford to take on more debt.
As part of this code of conduct, realistic timeframes have been set for the repayment of debt and in order to meet those timeframes and ensure that the consumer is able to be fully rehabilitated within a reasonable period, the credit providers have agreed to lower or even cancel their interest on the loan.
Read MORE:
http://www.mg.co.za/article/2010-12-07-code-of-conduct-on-debt
