12 Feb What Is the Court Process for Debt Review Removal?

Debt review can be a challenging situation. If you are no longer over-indebted and wish to exit debt review, our legal professionals can assist you. You can exit or remove debt review in four ways; by obtaining a clearance certificate, through rejection, by proving you are no longer over-indebted, or via a court order.

Clearance Certificate

If you fulfil all your obligations under debt review (your accounts are no longer in arrears), your debt counsellor must issue you a clearance certificate within seven days. A clearance certificate can also be issued if you demonstrate the financial ability to satisfy future obligations under a bond or other long-term agreement and have settled all other debts included in your debt review order.

What If Your Debt Counsellor Won’t Issue Your Clearance Certificate?

If a debt counsellor refuses or fails to issue a clearance certificate, you can apply to the Tribunal to review the decision. If the Tribunal is satisfied you’re entitled to the certificate, it may order the debt counsellor to issue it.

What Happens After You’ve Been Issued Your Clearance Certificate?

Once a clearance certificate is issued — the document you need to remove bad credit report marks — the credit bureaus or national register must expunge records of the debt review and related defaults after you lodge a dispute. This includes records of debt re-arrangement (debt review), information about defaults leading to debt review, and any credit agreements flagged as under debt review. To lodge a dispute, you must write a credit clearance letter.

A Debt Counsellor Rejects Your Application

If your debt counsellor rejects your application and the prescribed time for direct filing has expired without you applying directly to the Magistrate’s Court, you can apply for a withdrawal form – Form 17.2 (W).

The Court Rejects Your Application

If the Magistrate’s court rejects your or your debt counsellor’s application because you’re not over-indebted or your obligations are fulfilled.

You Can Prove Yourself No Longer Over-Indebted

If you can demonstrate your ability to satisfy future obligations under your original credit agreement that are long-term – such as a mortgage – you can apply to exit debt review.
You can’t exit debt review until the arrears on past credit agreements have been paid.

The Judicial Process of Debt Review Removal

This information applies if you want to prove yourself no longer over-indebted without a clearance certificate. Note that much of this information is not explicitly mentioned in the NCA or debt review removal legislation. Rather, it’s inferred by existing case law.

Prove You’re No Longer Indebted to the Magistrate’s Court

First, you must apply to the Magistrate’s court for a hearing at the Tribunal court. In Du Toit v Benay Sager (NCRD2484) t/a Debt Busters and Others (unreported case no 16226/17, 17-11-2017), attorney Du Toit writes you’ll have to apply in terms of NCA section 86 (9) – “If a debt counsellor rejects an application as contemplated in subsection (7)(a), the consumer, with leave of the Magistrate’s Court, may apply directly to the Magistrate’s Court, in the prescribed manner and form, for an order contemplated in subsection 55 (7) [c].”

Du Toit wrote that you, “must demonstrate circumstances and reasons that show that it is necessary, in the interests of justice and equity, that the investigation should shift from the statutory body to the judicial authority, in its discretion.” He says you must prove your case deserves a hearing and should progress to the Tribunal and High Court. You’ll have to persuade the court to reject the findings of your debt counsellor and find you not over-indebted.

In case law, it’s stipulated that you must exhaust all other avenues (such as applying for a clearance certificate) before taking this route, as your application is foremost at the discretion of the Magistrate’s court. You’ll need a good attorney from Cape Town Legal Consultants to help you with the debt review removal process.

Apply for a Clearance Certificate

You can also apply for a clearance certificate once your account is no longer in arrears. In Botha v Koekemoer t/a The Debt Expert 2 and Others; Mafakane v MSA Consultants t/a Consumer Financial Services and Others the judges ruled that a debt counsellor could present new information about a consumer’s improved financial circumstances, allowing the Magistrate’s Court to determine whether the you’re no longer over-indebted.. You must have satisfied all agreements under section 71 (b) (i) – that your accounts are no longer in arrears.

Once your account is no longer in arrears, you can exit debt review and submit evidence that you can fulfil your original credit agreements. You would have to produce evidence that contradicts the court application (of your over-indebtedness) that your debt counsellor found.

Alternatively, you can apply for a clearance certificate if your accounts are no longer in arrears. If your application is denied, you may escalate the matter to the Tribunal.

Choose a Cape Town Legal Consultants Attorney

Our attorneys can assist you in proving you’re no longer over-indebted or apply to the Tribunal for a clearance certificate order. We understand that debt review is a trying process and rebuilding your credit is crucial to maintaining good financial health and taking control.

To learn more about our services, contact Cape Town Legal Consultants. Take your first steps toward financial freedom today.