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A: Blue Star Consultants helps South Africans struggling with their debt through a program called Debt Review (also referred to as Debt Consolidation or Debt Counselling).

In short, our program reworks your debt repayments into an affordable, consolidated repayment plan – meaning your debt repayments are made into one single, reduced repayment.

Your repayment plan is formulated in such a way that it enables you to pay your debt as well as pay for essential living costs (school fees, food, rent, commute etc.), giving you immediate financial breathing space.

Your repayment plan is agreed upon by your creditors (we negotiate with them on your behalf), is regulated by the National Credit Act (NCA) and authorised through a Court Order. This means that our program legally protects you, and your assets (car and home), against creditors who want to take legal action against you.

Once you have completed your Blue Star Consultants program you will receive a Clearance Certificate. This is sent to you and the credit bureaus. The credit bureaus will then remove the Debt Review flag from your profile as well as all your default listings. Your payment history will however still reflect on your credit profile for two years as per the conditions of the National Credit Act (NCA).

A: The National Credit Regulator (NCR) is the official governing body that regulates and monitors the Debt Counsellors who are registered with the NCR.

If your Debt Counsellor takes consumer rights and lawful practices seriously they will be registered with the NCR.

The Debt Counsellors of Blue Star Consultants are indeed registered with the NCR.

A: To qualify for the Blue Star Consultants program depends on various factors. But, foremost you will have to be seen as over-indebted, as defined by the National Credit Act (NCA). In short, being over-indebted means that you are unable to pay your monthly financial obligations.

Other factors that influence whether you qualify for Blue Star Consultants program includes the following:

• Your income.
• The type of debt you have (secured/unsecured debt).
• The amount of debt you have.
• Your living expenses.
• Your marital status.

Blue Star Consultants offers a free, no-obligation, debt assessment to determine whether you would qualify for our program.

A: You can check your credit record with any credit bureau. There are mainly four credit bureaus in South Africa. They include; TransUnion, XDS, Experian and Compuscan.

By law, you are entitled to pull your credit record for free annually.

A: First, we would recommend that you pull your credit record to see what it looks like and whether it is in good standing or not. It is also a good idea to check your credit record regularly to make sure everything is as it should be.

If you see that there are accounts whose status are in arrears you will have to pay the arrears, and then make sure that you keep up to date with those accounts going forward.

If you have Judgements or Administration Orders on your profile you will need to settle the outstanding debts to have that information removed.

Avoid applying to various creditors for credit in a short period of time, this will affect your score negatively. Furthermore, every time you apply for credit and it gets disapproved it also negatively impacts your credit record.

The best way to improve and keep your credit record in good standing is by paying the full instalment that is due on time every month and checking your credit record regularly.

A: Unfortunately, we do not.

To be able to qualify for Debt Review/Debt Consolidation/Debt Counselling you must be employed or receive regular and consistent income. No creditor will accept a non-payment as a viable option during our negotiations with them.

If you are unemployed you can, however, negotiate with your creditors directly to see if they can offer you some sort of breathing space for a few months. Pay them as far as you can and do not stop looking for employment. If too much time passes and you still do not have employment, they will Summons you. You will then be able to explain to the court that you are unemployed, and you can ask the court to give you 3-6 months to find a job. Do not stay away and ignore the Summons. Show up at the court and state your case.

A: Our program is created by South Africa’s National Credit Act. Therefore, the only way we can assist non-citizens with their debt is:

• if you have a passport number,
• can prove that you are permanently working in South Africa, and
• your debt is with South African creditors.

A: You are insolvent when your liabilities are more than your assets. When considering your assets, you include all income, properties, vehicles, cash in the bank, investments etc. Liabilities are all your debt.

If you want to remain solvent, you must be in a position where your assets are more than your liabilities. When you are insolvent, you can apply for sequestration, which is a process where your assets are sold to offset your liabilities.

Usually, your creditors must get a specific percentage of the proceeds of the sale of your assets. After this, you will not be able to apply for credit for five years, after which you can apply for a rehabilitation order. There are alternatives such as Debt Review, which you should consider first before applying for sequestration.

A: No. Administration only pays your creditors every third month, the rest of the payments go towards admin fees and commissions. Plus, Administration is only for a debt of R 50 000 or less.

Lastly, Administration exclusively deals with unsecured debt. So, your secured debt, like a home loan or car loan is not included.

A: No. With Sequestration your assets are sold to cover your debt and for five years you are not allowed to get credit after being sequestrated.

A: If you received a Summons before entering Debt Review we will not be able to include that account in your Debt Review.

However, we can try to convince that creditor to take part in the Debt Review, but ultimately it will stay the creditor’s decision whether or not they want to participate.

A: Yes, all debts must be included in the Blue Star Consultants program. The only debt that may be excluded (but what you still must tell your Debt Counsellor about) is if your creditors have sent you a Summons before you applied.

A: No. Debt Collection is when an attorney, a person who is an agent of an attorney or a registered debt collector collects, on behalf of the credit provider, an outstanding amount plus lawful interest, admin costs and collection fees, which by law is capped to certain amounts.

A: In certain cases, we will be able to assist.

But it would depend on that person’s situation. To be viable for our program they would need a stable income to start with. Other factors that will need to be considered first are the amount of debt they have, the type of debt they have, what their living expenses are and their marital status.

A: If you miss a payment it will give your creditors enough legal reason to terminate your Debt Review and begin legal action against you.

If you find yourself in circumstances where you see you might have trouble paying your next instalment you must contact one of the Blue Star Consultants Debt Counsellors immediately to make arrangements.

Also, if your payments are in arrears no further work will be done on your application until payments are 100% up to date (even if a payment arrangement was made).

A: No, Debt Review is not a consolidation loan.

A loan means more debt. With consolidation loans, you only shift your debt from one place to another. Most people will not qualify for a consolidation loan. Unlike consolidation loans, which have very strict requirements (and at the end leaves you with more debt) Debt Review restructures your credit obligations to an affordable, consolidated, repayment plan.

A: As a rule, no. It will be seen as reckless since being in Debt Review means that you are not able to pay your current debt. Therefore, the National Credit Act (NCA) prohibits you from acquiring any further credit while you are in Debt Review. Which makes sense since credit is what caused most of our clients’ debt.

The reason for this is that whilst under Debt Review your budget is calculated and precisely allocated to your current debt obligations and other living expenses.

But once you have completed the Blue Star Consultants program you will be able to apply for credit again.

The exception to the rule is a consolidation loan. Consolidation loans have strict application requirements. A reputable credit provider will do a full assessment to determine if you qualify for a consolidation loan while under Debt Review.

A: Yes, that is a great way to speed up your Debt Review program.

When you have extra income (like a tax repayment, a bonus or salary increase) you can contact one of the Blue Star Consultants Debt Counsellors to make the arrangements for you. In this situation, you can also stipulate to which creditor you would like to make the extra payment. Important, do not pay it directly to your creditors without notifying a Blue Star Consultants Debt Counsellor.

If you have enough extra cash to settle an account in full you are also welcome to do that. How to settle an account:

• Contact the relevant creditor to obtain a final settlement figure.
• Pay the creditor directly.
• Send the proof of payment and paid-up letter to a Blue Star ConsultantsDebt Counsellor so that they can remove the account from your Debt Review and recalculate your payment plan.

A: Once an account is paid-up in your program the Payment Distribution Agency (PDA) will take the money that would have gone to that creditor and evenly distribute it towards the accounts that are left in your Debt Review program.

A: If everything is in order with your Clearance Certificate you and the credit bureaus should receive it within a few working days. Before issuing a Clearance Certificate Blue Star Consultants will require paid-up letters from all you credit providers. This might take some time depending on the cooperation of your creditors and can sometimes cause a delay in the process.

A: In theory, you should be able to apply for credit again within a week of receiving your Clearance Certificate. But we have seen that the credit bureaus take longer than that to clear your record. We would suggest waiting three months before applying for new credit.

After the credit bureaus receive your Clearance Certificate each account in your Payment History should have a “Paid Up” or “Closed” status. Since your Payment History remains on your credit report for 2 years your credit score will take some time to become good – as time passes your credit score will improve, and by six months it will be in a much better standing (but you don’t have to wait that long to apply for credit).

Pull your credit report about one month after receiving your Clearance Certificate. Check that everything is in order before applying for credit. If you see that the Debt Review listing sill reflects on your credit profile contact the credit bureau immediately to rectify the listing.

Also keep in mind that even though your credit score might be good, credit providers might still have a flag indicating your history on their internal systems. They must also remove those records. It always remains the decision of the credit provider whether or not they want to extend credit to you. If they do decline your credit application, you have a right to know exactly why they declined it.

A: It would depend on the type of business. We can only assist you when your business is a sole proprietorship. We won’t be able to assist if your business is a Private Company (PTY) or Closed Corporation (CC) or a Business Trust.

A: If you stay up to date with your Debt Review repayment plan your creditors will not be able to take legal action against you – including repossession.

Even with the above said, creditors could try to intimidate and threaten you (which is unethical and unlawful). When a creditor harasses you, you can take the following steps:

• Record all details of the harassment.
• Inform the creditor to contact Blue Star Consultants
• Contact a Blue Star Consultants Debt Counsellor and instruct them to open a Creditor Harassment Incident Report.

The Blue Star Consultants Debt Counsellor will then handle the situation for you further.

Regarding vehicle repossession: Under no circumstances do you hand over your vehicle. Debt Collectors use illegal, dishonest, ways to trick you into giving up your vehicle. If confronted by them, do not sign anything and contact one of the Blue Star Consultants Debt Counsellors immediately.

Repossession is only legal when a Warrant of Delivery is handed to you by the Sheriff, and not in any other circumstances.

A: You can log a dispute directly with the credit bureau where the wrong information is listed on your record.

If the wrong information is because of a specific creditor you can log a complaint with the Credit Ombud to dispute the listing on your record. Alternatively, you can ask one of our consultants to assist you

A: Debt can only be written off by two means, namely Prescribed Debt and Reckless Lending.

Prescribed Debt

Debt has only prescribed if there has been no attempt by the credit provider to collect it or if no summons has been issued for the debt during the last 3 years. Also, if there has been no acknowledgement of debt during the last 3 years. If you have made any form of payment in the last 3 years, it constitutes an acknowledgement of debt.

Prescription of debt is a defence; so, when the credit provider attempts to collect you can claim prescription as a defence. You will need to get an attorney to write a letter on your behalf to the respective credit providers notifying them that the debt has prescribed. If the debt has indeed prescribed already, the new Credit Amendment Act prohibits the prescription to be interrupted after 3 years.

The exception to the above-mentioned is Bond Accounts and Judgements – as the term for these are 30 years.

Reckless Lending

Reckless Lending is when a creditor has failed to conduct a thorough affordability assessment – as required by the National Credit Act (NCA) – at the time of giving the credit. It is also when the credit provider has given credit despite the fact that you did not understand the costs and obligations of the agreement, or when the credit agreement will lead to you becoming over-indebted.

At Blue Star Consultants we offer the option to our new clients of conducting a Reckless Lending investigation.

A quick note about Credit Amnesty

Credit Amnesty was a once-off occurrence between April and June 2014 where the credit bureaus were forced to remove adverse information from credit records. In no way did Credit Amnesty write off people’s debt, it only removed outdated information from the credit records of people who have paid-up their debt.

A: Yes, you can.

Surrendering your vehicle while your payments are still up to date:

Contact the creditor and give them a written notice that you want to surrender your vehicle. In five business days, you will have to surrender the vehicle to the creditor. Within ten business days of receiving your written notice, the creditor is required to provide you with an official evaluation of the vehicle (stating its value). The creditor will then sell your vehicle. If the creditor sells your vehicle for less than you owe on the car you will be responsible to pay the outstanding amount.

If you are dissatisfied with the evaluation provided by the creditor you can withdraw the notice and recommence the possession of the vehicle. You can also sell your vehicle privately to get a better price.

Surrendering your vehicle when you are behind on payments:

You can inform your creditors that you want to voluntarily surrender your vehicle. Once you signed the voluntary agreement your car will be repossessed.

When you surrender the vehicle during the debt review process – the correct procedure will be to suspend further payments to the creditor until the shortfall amount, if any, has been established. Whereupon, depending on the circumstances, repayment can continue.

A: If your cell phone contract is included in your Debt Review budget you should be able to upgrade.

Make sure the monthly amount is not more than what is provided for in your budget. If the upgrade negatively affects your cash flow, it could have repercussions for your Debt Review. Always make sure that you are able to honour your Debt Review payments

A: Debt Review is a great option for South Africans in serious financial trouble, still, they will need to consider the pros and cons of the program.

The Pros:

• Consolidate your debt without having to add an additional loan to your debt mass.
• Monthly instalments could be reduced by up to 60%.
• Financial relief with the above mentioned reduced instalments.
• Your home and car stay safe – No repossession, no legal action from your creditors.
• You will be able to afford your family’s crucial living expenses.
• Once the program is successfully completed you will enjoy complete financial rehabilitation with a clear credit record.

The Cons:

• You will not be allowed to get credit while in the program.
• Your Debt Review will be listed on your credit record until the completion of the program or when all your debt listed under Debt Review are paid up in full.

A: When in Debt Review all your current credit agreements are restructured into your monthly Debt Review repayments.  Furthermore, you are not allowed to acquire any new or additional credit during your Debt Review program.

With that said you will not be allowed to trade in your current vehicle below Debt Review for a new vehicle if it is linked to a new credit agreement.

A: All credit agreements must be included in your Debt Review. The only exception is those credit agreements where the creditor has started legal action. But even then, you will have to let your Debt Counsellor know about the agreement so that it can be taken into account in your overall monthly budget.

(Very important. You have to disclose all your accounts to your Debt Counsellor, no account may be excluded.)

Furthermore, if you have a shared credit agreement (where you and your spouse, for example, both signed for credit) the person you share that agreement with will also have to apply for Debt Review with you in a joint application.

Regarding service agreements (like tax debt, municipal debt, school fees etc.). Usually, they are not included in your Debt Review, but they still, need to form part of your overall monthly budget. There are however exceptions to this.

Each client’s debt and overall financial situation differs, so we would advise getting our free Debt Assessment where a Blue Star Consultant will be able to determine how your Debt Review will be structured according to your various accounts and financial obligations.

A: Creditors have the right to terminate your Debt Review when:

• Payments are not received according to the payment plan.
• The amount being negotiated is not accepted.
• When a counteroffer is not accommodated.

In the case of termination, Blue Star Consultants will apply for reinstatement.

The biggest reason we have seen for a creditor to terminate a client’s Debt Review is that the client stops making their monthly Debt Review payments. Missing a Debt Review payment gives the creditor the legal standing to terminate the client’s Debt Review and in the worst case, begin with legal action against the client.

A: The National Credit Regulator (NCR) is the ‘regulating body’ of the South African credit industry. The regulator was established by the National Credit Act No. 34 of 2005 (referred to as ‘The Act’).

The regulator aims to encourage the development of an accessible credit market – mainly involving underprivileged persons, low-income individuals, and isolated communities. Credit bureaus, credit providers and debt counsellors are regulated and required by the NCR to comply with ‘The Act’.

A: If you completed your previous Debt Review successfully then it should be possible.

But it is very unlikely that your second Debt Review will be granted if you failed to pay your first Debt Review instalments. The main reason for this is that you will still need to pay your first Debt Counsellor’s outstanding fees. Plus, your creditor will most likely not agree to any new repayment plan since the last repayment plan was not followed.

A: The National Credit Act / NCA (also referred to as ‘The Act’) became fully operational on 1 June 2007. The Act aims to provide improved standards of consumer information and strives to promote a fair and non-discriminatory platform for consumer credit by regulating the process.

A: The National Credit Act (NCA) has been a subject of criticism due to its drafting and wording. The National Credit Amendment Act (NCAA) became operational on Friday, 13 March 2015 and contains the broadest changes to the Act to date.

A: The National Credit Act (NCA) must be read with the National Credit Regulations (the Regulations) promulgated in terms of the NCA (or ‘The Act’). The Regulations are complementary to their enabling sections in ‘The Act’. They provide for matters not specifically dealt with by sections of ‘The Act’. The Regulations became operational on Friday, 13 March 2015.

A: Due to the endorsement of the National Credit Act 34 (of 2005) in 2007, Debt Counsellors started their profession in the Debt Counselling industry. Debt Counsellors are required in terms of section 86(6) to conduct an assessment concerning the over-indebtedness of a consumer. Through the Debt Counselling or Debt Review process a Debt Counsellor, therefore, offers a responsible and regulated rehabilitation remedy to an over-indebted consumer or individual.

If the Court declares an individual as ‘over-indebted and the person goes under Debt Review, the Debt Counsellor needs to remain a person of trust and integrity. Typical tasks involve the following (but are not limited to): negotiating with creditors, taking care of the necessary registration processes and various behind-the-scenes administrative tasks.

A: Over-indebtedness refers to a situation when you do not have the means to meet all of your debt obligations or financial commitments at the end of each month.

A: It is your RIGHT to ask the relevant creditors (that declined your application) for insight into why the application was rejected.

And, you have the RIGHT to pull one free credit profile per year, investigate your credit profile and make sure that there are no irregularities on the profile that might negatively affect your credit score.

A credit profile shows the credit providers what your credit health is as well as how you manage your credit/pay credit agreements.

It is, unfortunately, true that without a credit record the institutions cannot see that you are a good ‘payer of credit’, especially on a large amount.

Our advice as debt industry leaders will be to open a credit agreement (for example, a credit card or store card) and build your credit record in a controlled manner.

Keep in mind that while trying this method, you should always regulate your income, expenditures and debt amounts.

Good luck with (slowly but surely) building a good credit record. And, continue to sustainably manage your debt the way you have already set forth.

A: Many South African consumers are under the impression that the term ‘blacklist’ still exists, but there is, in fact, no such thing anymore. The word ‘blacklist’ should rather be replaced with the following: consumers that portray or have a bad credit record/profile.

The word ‘blacklist’ is sometimes evident in marketing campaigns to ‘frighten’ consumers. The word or concept has not been in use for a while now and this informal term was used during a time when credit bureaus only kept negative data or information on record about consumers’ ‘credit behaviour’. These days’ positive data also appear on a person’s credit profile.

A: A service agreement is an agreement where the service provider performs physical work (labour), services or responsibilities for or on behalf of the customer/consumer/client against compensation or payment.

Typical service agreements include gym memberships, phone, or data contracts, for example.

A: A credit agreement is a contract/agreement between a consumer and credit provider in which a credit provider offers a product or monies to the consumer. According to the National Credit Act (NCA) the consumer has to be given a contract (that explains the terms and conditions of the agreement) and a quotation (disclosing the total amount/fees payable under the specific agreement) by the credit provider on acceptance of the agreement.

The Act also defines a credit agreement as:

a)         a credit facility,

b)         a credit transaction,

c)         a credit guarantees, or

d)         any combination of the above.