How to Withdraw from Debt Review – as of 2022

In previous years, the Industry still allowed Consumers to Withdraw from Debt Review and that is why you may read contradictive articles on whether a Consumer can or cannot Withdraw from debt review. So as of September 2019 the most important case law (Van Vuuren v Roets and Others (37407/2018) [2019] ZAGPJHC 286; [2019] 4 All SA 583 (GJ); 2019 (6) SA 506 (GJ) (3 September 2019) came out, which changed how and when a Consumer can exit Debt Review, which will be explained below.

You can also go and read the Withdrawal Guidelines (2021) that was issued by the NCR HERE

However, the majority of the  Industry still allowed a Consumer to decide whether he or she wanted to exit as long as a Debt Counsellor has not made a decision that they are in fact over indebted. In the Industry we call it a Form 17.2(b) over indebtedness declaration.

The National Credit Regulator in March 2022, sent out a Circular which was the Explanatory Note to the Withdrawal Guidelines, referred to hereinabove. You can have a look at the Explanatory Note HERE

To summarise, the NCR informed the Industry that because the Van Vuuren Judgment stated that a Consumer’s rights are freezed when the Consumer applies for Debt Review, that means according to the NCR, the Consumer is deemed to be immediately placed under Debt Review when he or she applies for Debt Review. If  any complaints arise or confusion we refer you to the National Credit Regulator  HERE 

HOWEVER AS OF MARCH 2022 THE WITHDRAWAL PROCESS IS AS FOLLOWS: 

Three scenarios

Form 16  ( Application of Debt Review) —–  Form 17.2
Upon application for Debt Review and before the Debt Counsellor makes a declaration of not over-indebted (Form 17.2(a)) OR over indebtedness (Form 17.2(b)) a Consumer canNOT withdraw from Debt Review. The Debt Counsellor CAN however, if he/she sees that you are not over indebted declare you NOT OVER INDEBTED and then ask the NCR to remove you from Debt Review.

However, if you are over-indebted, you will remain in the process.

Form 17.2(b)  ——- Court Order
Once a declaration of over indebtedness has been made but there’s no Debt Review Court Order yet, the most recent Court Case with a Full Bench Judgment declared that, a Consumer may together with the proposal of the Debt Counsellor present additional facts to bring about a rejection of an Over Indebtedness proposal.

A Consumer must note that this will be when your financial circumstances have drastically changed, in that you can afford to repay your debt in terms of the original credit agreement;

In addition, the arrears including the arrears “caused by the Debt Review application” should also be settled as if you have never applied for Debt Review. Thus, placing you in the position you would have been to perform in terms of your obligations as per the original credit agreement.

After a Court Order 
In terms of the said full bench judgment, once a Debt Review Court Order has been granted, the only manner to exit Debt Review is by Section 71 of the NCA.

Section 71 of the NCA states that a Consumer has to repay all his/her short-term debt, except long term debt. Which means that all debt has to be paid up, except for a Home Loan in order to be cleared from Debt Review.

TO SUMMARISE for a Consumer 

1. determine where are you in the process? i,e is it before a court order or after a court order
2. If before a court order and you can now afford to pay your debt, go to an attorney that can make an application to the court to declare you “not over-indebted” . We have some attorney listings here
3. if there is a court order, then you pay up all your debt (except home loan) the debt counsellor then issues a form 19 to clear you from debt review. NO RESCISSION OF A COURT ORDER IS NEEDED!!!!
4. BE AWARE IF ANYONE APPROACHES YOU AND SAY THAT THEY CAN RESCIND YOUR DEBT REVIEW COURT ORDER, IT IS NOT IN LINE WITH THE NATIONAL CREDIT ACT, many people have been scammed by this.