# Social Category > The Whistleblower Forum >  Debt counselling gone horribly wrong

## Dave A

I have been following a story about debt counselling gone wrong for quite awhile now. It has been truly frustrating.

I haven't posted anything on The Forum SA so far because every time my sense of justice is inflamed to breaking point, it seemed the problem had been resolved. However, it just keeps coming back – getting worse and worse every time.

Ordinarily I wouldn't name names, but this has gone on for so long and is such a disgrace that I believe the delinquents deserve to be named.

It is quite a long tale of woe, so I will break it down into episodes that I will post over the next few of days. This should be quite a ride!

The story starts in 2009. Mrs X's husband has been struggling to find work for over six months now, and she realises that financially they are in over the head. Mrs X is making decent money, but it isn't enough to get by with the existing financial commitments without a second salary from her husband.

So quite sensibly, and in accordance with the National Credit Act, she contacts a debt counsellor to go under debt review.

In November 2009 she contacted ***** of *****, placing her financial future in his hands.

All seemed to be well. Various notices floated back and forth and in December 2009 she started paying the debt counsellor the agreed amount for distribution to the various creditors. Of course the debt counsellor gets paid first, so the creditors only started receiving money in March 2010 by the looks of things. But everything seemed to be sorted.

That is, until a call from Standard Bank in November 2010. Suddenly it became clear that all was not going to plan. But that's a story for the next episode.

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## Blurock

Scary if it takes 3 months for the first payment to reach creditors. More interest and penalties. By that time you are well up to your nose in the brown stuff! :Yikes:

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## Citizen X

When I was in the retail industry, HR always maintained that the only way you will reduce shrinkage is to hire honest people, they added...but how do you know who is a honest person. An adage from that time holds true, " a new broom sweeps clean." This is certainly not the first horror story I've heard about debt counsellors. I don't want to disparage an entire industry but it seems there are many rogue elements in the debt counselling industry. They know that you vulnerable and scared when you come to see them!!

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## thinusmj

How does the Debt Counselling process work?

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## thinusmj

*Debt Counselling Fee Structure*

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## Dave A

Thinus, thank you for the link to the rates debt counsellors should be charging. Just for the record, it seems the debt counsellor managed to pocket the first R10 000 for his efforts as debt counsellor! Some of this money probably should have gone towards legal expenses, but here comes the first twist in this tale.

The call from Standard Bank Asset Finance in November 2010 was to inform Mrs X that her debt administration arrangement had been terminated. She was told that she must settle the outstanding balance owed (or perhaps that might have been the arrears owed) or the car would be repossessed.

Mrs X immediately contacted the debt counsellor, who assured her that the arrangement had to be reviewed annually and he would attend to the renewal and deal with Standard Bank. In December 2010 the debt counsellor forwarded an e-mail to Mrs X from Standard Bank which was quite brutal. Standard Bank held that Mrs X had entered into debt counselling on 26 November 2009. Accordingly they should have received a payment by the end of February or early March 2010 and the account was formally terminated on 29 March 2010 due to non-payment.

In hindsight, it emerged that the payment made on 7th March 2010 to the debt counsellor was only disbursed to creditors in June 2010. If this disbursement had been paid out timeously, it seems much angst could have been avoided - or at least Standard Bank would have had one less excuse to duck out of the debt rearrangement process.

Mrs X appealed to Standard Bank asking for some latitude and could they please stick to the debt rearrangement agreement. Quite generously, Standard Bank agreed to hold off on action if Mrs X could present proof that the debt arrangement had been made an order of court.

What good news!
Or so we thought.

Mrs X approached the debt counsellor and asked for a copy of the order of court – you know, the one you are supposed to get as part of the debt rearrangement process. There was a deafening silence.

Sick and tired of all this nonsense, I called the debt counsellor in January 2011 to find out what was going on. Where was the court order?

The debt counsellor's reply was "Do you know what the backlog is like in the courts? It takes forever to get an order of court on these things!"

So I asked if he could at least send a copy of the application. No, he had not even made an application for a court order.

My parting shot to the debt counsellor was "You cannot claim a backlog at the courts as a defence if you have not even made an application! You are responsible for this mess, and I expect you to fix it".

Just for the record, Mrs X is adamant that the debt counsellor had told her part of the initial fee was to cover the costs of getting a court order. She had paid for a court order and it seems the debt counsellor pocketed the money instead.

Probably a good place to end this episode. I regret there is much more to follow.

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## Citizen X

There is a backlog in the courts but not any backlog to him taking his fee, that priority is in the front of his queue!

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## thinusmj

Dave,

Mrs X should file a complaint with the NDMA.

Consumers and industry stakeholders may also submit complaints through the NDMA website: www.ndma.org.za

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## desA

Seems like every dog & its fleas are out to skim off desperate folks. What an awful situation to be in.

I really do hope that folks see it as imperative to wean themselves off this credit drug. The result is debt slavery, which can take years off their lives. Better to limp along using cash. At least you then own what little you may have.

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## Blurock

My New Year's wish; 

Lord, please help my neighbours to stop buying the things I can not afford... :Innocent:

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## Dave A

***** is bought out by Credit Assist and from this point onwards, the original debt counsellor disappears from the scene.

With Standard Bank threatening to repossess the vehicle at any moment, there is a mad scramble to try to sort out the sorry mess before the damage becomes irreparable. Quite a few errors are found in the management of the accounts, but the biggest problem remains Standard Bank which is proving rather obstinate. They are determined that they are not bound by any debt review and want the account settled or the vehicle repossessed as soon as possible.

The matter was escalated to Andre Snyman of Consumer Assist to try to repair the damage caused by the debt counsellor. Of course Andre was trying to claim that they were not responsible as all they did was purchase *****. My view was that in purchasing ***** they had acquired their clientele, and in so doing had also acquired responsibility to correct the problems that ***** had caused.

In the end Andre agreed to pursue the matter personally – and for a while it seemed he had succeeded. The threatening phone calls from Standard Bank stopped, and around May 2011 there even was a phone call from Standard Bank Asset Finance thanking Mrs X for her regular payments.

And then, one balmy Sunday evening in August 2011 there was a knock on the door. The vehicle with the Standard Bank finance was repossessed.

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## gac

A mess indeed and one that requires legal intervention and a claim against the Debt Councilling service provider. I really hope that MrsX can find legal assistance in this matter. I'm wondering whether it would not have been wise to appoint a new Debt Councillor at the time it was discovered that Van Sensie had not obtained the order of court.

Furthermore, once in a debt arrangement with the necessary Court Order, might it not be prudent for the Debtor to request the Creditors to advise them/debtor urgently should any of the arranged payments not be made on due date. This would provide an early warning of a problem enabling prompt action. One shouldn't have to go to these lengths but the lesson learned from this sad tale is that one can never be too cautious unfortunately in protecting one's self.

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## Blurock

Debt councillors are regulated by the National Credit Regulator. For Debt counselling related complaints send a mail to  dccomplaints@ncr.org.za 

For bank related complaints, contact the banking ombudsman.  :Batman:

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## Dave A

I need to move things up to current quite quickly, as there have been recent developments. So skimming over a lot of detail:

The whole sorry mess was taken to The National Credit Regulator when the vehicle was repossessed. The person attending to the matter from the NCR was Alvirah Phiri, who initially followed up the matter with some vigour. Having established that Standard Bank's avoidance of being bound by the rescheduled debt arrangement was as a direct result of the failure of the original debt counsellor to follow proper procedure and obtain a court order, Alvirah then proceeded to do nothing.

When pressed as to what the NCR was going to do to address the matter, her response was that there was nothing that could be done. The debt counsellor had not renewed his registration as a debt counsellor. Pursuing the buyers of his business for their failure to perform was useless as Andre Snyman is untouchable and Credit Assist is too influential. Alvirah then went on leave in December 2011 and has not reponded to enquiries since. 

An application for a court order was drawn up, which I see included Standard Bank Asset Finance. Credit Assist advise that a court order was finally made in February 2012, but have not released copies of the order until they have been paid costs by the debt counsellor, with whom they "still have a relationship" (exact words used).

In the meantime a summons has just arrived for the shortfall. It emerges the vehicle was sold in September 2011, and (predictably) there is a shortfall of approximately R42 000.00.

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## Dave A

The current flurry of emails flying back and forth has yielded this gem from Mrs X's husband:



I read an article in IOL news regarding an Attorney that new has to repay all his clients, because he did not follow NCA rules, regulations or guidelines.

Insert from a portion of said article:

"Judge Natvarial Ranchod also ordered Bornman to refund all past and current consumers debt counselling fees where he had failed to submit repayment proposals to credit providers or refer matters to the tribunal or a magistrates court within 60 days of the consumers applying for debt counselling.

Ranchod ordered the National Credit Regulator (NCR) to appoint an investigator to decide on the fees to which Bornman was entitled for the services he has rendered.

Zweli Zakwe, acting manager for investigations and enforcements at the NCR, says Bornman will have to surrender to the NCR his clients files so that they can be assigned to another debt counsellor.

The High Court case stems from an investigation in August 2009 by the NCR following 19 complaints about Bornman. Some of the consumers who complained to the regulator were being harassed by credit providers and, in some cases, had lost their assets even though they were undergoing debt counselling with Bornman.

The NCT heard the NCRs case against Bornman in October 2010. It found in favour of the regulator and ordered that Bornman be deregistered on the basis of repeated contraventions of the NCA. Bornman appealed against the ruling, but the High Court last week dismissed his appeal with costs.

During its investigation, the NCR found that Bornman contravened the NCA and the conditions of his registration in that he:

* Deducted commission to which he was not entitled.
* Was paid after-care fees for services he did not provide. (After-care fees are a percentage of the monthly instalment paid in terms of a debt repayment plan.)
* Failed to follow the debt review process prescribed in the NCA.
* Neglected to assess his clients level of indebtedness properly.
* Failed to issue repayment proposals to his clients creditors.
* Failed to submit repayment proposals or recommendations to the relevant magistrates courts "

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## Citizen X

*Okay, this is indeed messy in that one needs to establish who the parties actually are and what practical legal remedies are available. I’m assuming that summons for debt has been sued out?* *Based on what has already been posted, This is my findings:*
*1. There are tow other areas of law, both of which I’m not proficient in, but which nonetheless may bring about some retribution one way or another;*
*2. Estoppel: Estoppel is a doctrine which operates in the following circumstance, when one person (Ashley Van Sensie )represents to another person (Mr’s X) that a certain set of facts exist( You under debt review and I’m paying your installments) and the other person(Mr’s X) acting on the strength of that representation altered her legal position to her detriment. The person making such a representation is precluded or estoppd from asserting that a different set of facts actually exist. The idea is to be put back into the financial position one would have been in had the misrepresentation not taken place;*
*3. Standard bank must be shown that it is also in their best interests for protecting their brand to be a fellow plaintiff with Mr’s X and also sue for unjustified enrichment. In practice the following requirements must be met: 1: The defendant must be enriched, 2:the plaintiff must be impoverished, 3:the defendant( Andre Snyman )must be enriched at the expense of the plaintiff(Mr’s X) and the enrichment must be sine quasa(unjustified). Here we essentially looking at the transfer of value from one estate to another where such transfer from one estate has no sufficient legal ground. i.e. Enrichment is sine qausa when there is no sufficient legal ground for teh transfer of money to Andre Snyman or for the retention of that money in Andre Snyman’s estate.* 
*4. Estoppel can also be raised/pleaded against Andre Snyman Credit assist,e should be precluded alternatively estopped from asserting that they not responsible for this account.
i'm not sure if the staff of Standard Bank had escalated this matter to their CEO, since this matter is in the public interest, the CEO of Standard Bank should get personally involved here!
**What is both heart wrenching and cause for concern is this: When you subject yourself to the process of debt review you already at your wits end as a human being. You simply want a practical way forward, a way that allows you to pay what you can and thereby prevent the creditor from either repossessing your asset or obtaining judgment against you. Both eventualities have far reaching consequences. So, there you are, you subject yourself to the legally endorsed process of debt review, you go to a registered debt counselor. You have every right to expect nothing less than integrity from this person/organization. Instead of getting the anticipated resolution you get taken for a ride. Here’s the thing, we use terms such as “fit and proper,” to be criteria for admission to the legal profession and no doubt the profession of debt counsellor. You may be fit and proper when you start but as South African history has clearly demonstrated these fit and proper people can become rogue elements. Just recently in the headlines two acting magistrates were involved in an armed robbery!*

*Disclaimer: Please don’t take my advice, it will be to your detriment!!!!*

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## Darkangelyaya

I have had a similar experience as the X's, with Cleardebt, when I was diagnosed with breast-cancer.
The problem in my case, however, was blatant lies being told to me - maybe because of my 'fragile state', I do not know.

Suffice to say that I was focused primarily on fighting for my life, and not double-checking legal issues - after all, the debt counselor was there to lighten the financial stress a little, not so? (I had also paid R10 000, for legal fees etc, upfront).

When I finally got to my senses, and felt ready to start actively working again, and paying the full installments due, I first went to see the debt counselor. He had my file open in front of him, paged through it, and told me that I was lucky because none of my creditors had terminated yet. Happiness was me, and for the next three months I diligently paid my agreed total over to them.

Then one day, by chance, I drove by one of my properties I was renting out, and noticed a thick wad of documents stuck in the gate. It was a Notice of Motion document from Standard Bank, with a court date four days from the date I found it. It turns out that they had already terminated three months before the day that I was in his office. And they had not received a single repayment in six months.

I received absolutely no assistance from the NCR whatsoever, even after written requests. When I did phone, they made me feel worse than when I started debt review in the first place! (As did the friendly useless staff at Cleardebt).

It took almost three months more, before the (three month's installments) money was paid back to me, minus a 'handling fee'.

I almost lost everything as a result. I had to sell my trucks, equipment, and even furniture to save my property and vehicles.

The sad part is that had I used the money paid over to the debt councilors to pay my creditors, I never would have been in that situation in the first place.

Once again, a brilliant idea with human best interest at heart, has been turned into a money-making racket designed to bleed you dry when you are at absolutely the lowest point ever.

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Chrisjan B (26-Nov-12), Dave A (26-Nov-12)

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## meldasilva

> When I was in the retail industry, HR always maintained that the only way you will reduce shrinkage is to hire honest people, they added...but how do you know who is a honest person. An adage from that time holds true, " a new broom sweeps clean." This is certainly not the first horror story I've heard about debt counsellors. I don't want to disparage an entire industry but it seems there are many rogue elements in the debt counselling industry. They know that you vulnerable and scared when you come to see them!!


This is true that there are rogue elements and this is why you should seek out debt counsellors who belong to the Debt Counselling Association (DCASA). They are bound to a code of conduct and if tehy do not deliver you can go to the association for help.

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## AndyD

The problem with any industry association is that it's funded and supported by it's members so there's always a conflict of interests when it comes to policing conduct. End result is that the customer comes short every time.

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