Ceuar7 Debtreviw eoncont chook May 2018 ‘CIRCULAR 7 - CHECKLIST FOR DEST RE-ARRANGMENT APPLICATIONS - UPDATED To: DEBT COUNSELLORS FROM: MR, L. RABOTAPI (REGISTRAR) RE: MOTION COURT PROCESS - CHECKLIST FOR DEBT RE- ‘ARRANGEMENT APPLICATIONS - UPDATED DATE: = TMay 2018, Dear Debi Coussors, 1. sROUND ‘This isthe sevnt cular we ae issuing in respect ofthe moton cour proces a ajuda ‘on Debt Re-arangement Applications (ORA), Cela ited Inirim measures fo adress deleys in the processing of det re-arangement ‘pelicans fitd withthe National Consumer Trbunel (UCT) dated 3 August 2015, was sued bye-mallon7 August 2018. Circa 2 led Circular re motion cout proceedings dled 14 August 2015, was isued by e- imal on 14 Aust 2015, (euler tiled Debt e-rangement meton courts dated 17 August 2015, was sued by = mal on 17 Augst 2015, Cela ited Motion cour proces guiln od counsels dated 18 September 2015, ‘was ssued by emallon 21 Seplember 2015 Ciel 5 ited New consen order femplte dated 2 November 2015 was issued by email on 2 Noverber 2015. Cra 6 tiled Checkist for Debt Re-arangementAnpcaons was isued on 30 January 207 Page tof 15Cicala? VA Debt eve consent chests = 7 May 2018 2. CHECKLIST FOR DEBT RE-ARRANGEMENT APPLICATIONS This is an update on ciular 6 that was issued previously. It appears fom appicatons received that certain debt counselors require fuer lication on the previous cicar ‘ssued. ll adtons to his crear are inicated bod. ‘Debt counsels can use ths document as a checklist fo ensure tha thee aplicaions wil be considered, I any ofthe documents sted below are not induded in the application ten the ‘order may be reused or he application refered back othe debt counselor. ‘All the documents (application form, proposal, acceptance letters et.) that appear on the application brought to motion court must be the exact same documents that were ‘served on all the credit providers when the application was filed withthe NCT. The debt counsellor cannot and must not prepare any new cocuments when bringing the ‘pplication to motion cout. The only new document that will appear onthe application tormotion courts the proof thatthe application was served on the credit providers. ‘The lst below reflects the documents that must be on the application served on the rat provider (except the proof of service which wil raturally not form part of those documents) and therefore atached tothe application. I any ofthe documents are dated after the dat of service then they could not have been ‘sent to the credit provider and wil therefore not be accepted. To enable the Tribunal member to assess the applcaton as quickly as possible the ‘documents must further be attached inthe order indicated (1 to 11) (1) Consent order (attached soparataly to the aplication ~ must not be stapled or pinned tothe main application) (2) TWs is the tral order tal wil be signed by the Trbunal member, No other signature must appear on this order. Only the Tribunal member signs this order. (©) Te Debt counselor must use the template prodded by the NCT. No other fomat willbe accepted. Page 20115,@ ° Geeular7 Debt review consent checklist TMay 2018 (@) Tho basi principle is thatthe loan repayment payment information onthe consent order must match the loan repayment information on. the accoptance letters in every respect. (Do not insert dete on the consent order to be signed by the Tribunal ‘member. The Tribunal member wil insert the dat by han. (©) Ensure there is suliient space on the consent order for the Tribunal ‘member to sign as per the NCT template provided Proc of service @ Prof that the entre appicaton was served on al the ce providers. Wl usualy be a copy of the esl sent tothe credit providers with he application as an attachment, ‘Toe ate on which the email was sent to al the cret providers must clearly ‘appear onthe email. The email must clerl indicat that the application for section 158 order has been filed with the NCT and thatthe aplication is ow being served onthe credit providers. The correct emall addresses for all the credit providers must appear on the eal, The application must clearly appear as an attachment on the email, The exmall must clay Inicat the names and Identity Number of to consumer. ‘Short service The application allows fora eri of 15 business days for credit provider to file an objection tothe application, The application can therefore not be considered unt a period of 18 business days have elapsed from the date when the application was servedsent to the credit providers. Do not submit an application to motion court until the 15 business days have elapsed. Copy a ienty Docu @ (tear and legible copy of the Consumers identy document or identity card Page 301 15“ L Gecuar7 Debt review consent checist TMay 2018 Power of atorney lm @ ® @ @ Form signed by tbe consumes confming that thatthe debt counselor can act on their behalf in applying forthe debt re-erangement order and can sgn the ‘pplication and repayment agreement onthe beat. IF there are two consumers on the apoicaton then the pow o almey form sus be signed by both consumers or there must be two separately signed power of attomey forms. ‘The form must clearly indicate the names of the consumers, their dentity rumbers andthe date on which was signe. UF the consumer's signature was attached by electronic mem then a full ‘and detailed explanation of how the signature was obtahed must be ‘tached to the application, The Tribunal must be salisied that the consumer saw the actual form helshe signed, See Circular of February 2018 issued by the Chairperson of the Tribunal for futher detail n this regard ‘The form must clearly grant specie permission to the debt couneellor to ‘sign the debt review application on behalf ofthe consumers. Only @ natural person can register as a debt counsllor. The form must therfore grant power of atomey toa specific debt counsello: and thelr full names must bo reflected (cannot grant power of atorney to a debt counseling firm or company). Only the debt counsellor wo has the power ‘of ettorney indicated on the form can apply forthe consent order - no other bt counselor's name may appear asthe applicant. Page 4 of 15,Creuar7 L Debt review consent checklist ° o o 6 o T May 2018 Acceptance letters (@)._ Tho signed fate fom each credit provider areptng the repayment proposal ‘made by he debt counselor. The sanature maybe electronic ‘Tho letters must appear on the application or be fd inthe exact same order a hey appear on the consent ord. (©) Anema from a debt counsellor to a credit provider ing that, unos the credit provider responds to the proposal it wil be deemed to have been accepted, wll nt be considered as an accepted proposal Dealt consent order (@) This dat order must be signed bythe consumers o by the Debt counsellor on behalf ofthe consumers her is @ power of storey onthe application, Repayment proposal sent rei providers (@) A signed and dated copy of te fom 1 proposal sent othe ered providers, ‘hal also iss the cred providers and the repayments proposed. Income and expendi satement (2) For seting out te income and expend ct the Consumer and the amount availabe for payment to creditors. Nomaly this information forms pat of he For 16 thats sent tothe credit providers. CT aplication frm (Section 138 frm) (2) Form mustbe fly completed, dated and signed by the debt counselor. Page Sof 15Clr? VA Debt vow crs cet May 2018, (10) Consent to o-al service eter: (@) Copies ofthe standard Iter from each credit provider confming that they consent to seve by e-mail This consent often also appears inthe certificate of balance sent by a credit provider - inthis case a separate consent to service need nat be attached for that crodt provider. (11), Proof fee payment (@) Prof thatthe R200 fee was paid fo the NCT. Usual 2 copy of he EFT payment made lo the NCT account together with a ist of the names and identity rumbers ofthe consumers applicable. 3. COMMON PROBLEMS WITH APPLICATIONS The folonng is examples of checks performed by the Tebunal members andthe commen problems experianced - wich may resut inthe appiicaton being refused or rtumed othe debt counselor for corectons. An example ofa properly completed orders tached to is cect. (1) Order template as provided by the NCT must be used. Must refect the case rumber on each page, page numbering et. (2) The case number appearing onthe order must match the case number onthe application or the noice of complete fing, (2) The name and deny number of the consumer inthe order must malch the lnformaton on the consumer's 1D document. Names then sumame of the consumer must appear on the consent order (ot surname and then names). Page 6 of 15L ® © o o ® Greuar7 Debt revi consent checks May 2016 In instances where a married consumer has not formally changed he ‘surname ~the surname as it appears on her identity document must reflect ‘on the order not the married surname, The names and the numberof ered providers sted on te oder must mach the ruber and names on the acceptance letlers or the Fom 16 proposal. Al he cre providers Isied inte proposal mus aocept he propsal any one credit provider doesnot accept the proposal hen te order willbe refused The caren outstanding balance, payment period, ennval interes, monthly lnstalment and feesinsurance reeled on the order must match the accepance lets. ‘The outstanding balance reflected on the consent order must match the scoaplance ler. If the balance isnot reflected inthe acceptance ler then it ‘must match the balance reflected inthe Form 16 proposal or nth certiicat of balance, The certificate of balance must then be inserted In the application rectly after the acceptance letter to make it easier forthe Tribunal member to check, M Pie and Old Mutual Finance are examples of cre providers that oot general reflect the oustanding balance inher avcoptance ltr. Ihe acceplanes ltr states thal the monthly payment is cascading then the word Cascading” must appear below the moc istament amount inthe oder. -Aeceplance ltrs fom FNB olen conan a reference tothe instalment amount being cascading. ‘The complete and legally registered business name of the credit provider ‘elcid in the aceplance leter must mach the name refeced in the order racy ~ Le. ‘Fst Naonal Bank, a dision of First Rand Bank Limits’, OG Trading (ry) (Ld) on behalf of Electric Expresso Page Taf 15Greular7 A, Debt review consent checkist TMay 2018 4, CITATION OF PARTIES ‘The credit provider's correct company name must appear on the order nt the agent or the debt coletion agency. The name ofthe agent can appear in brackets after the credit provider's name if necessary ~ “Treworths (Agent for credit provider ~ Consumer Friend) Only the name of the credit provider must appear asa party on the order ~ not the type of oan. For example - do not reflec: "Woolworths Financial Services (Py) Li (Persona oan)” ‘credit Provider ‘The credit provider name reflected foreach loan inthe table must match the name of the credit provider listed as a party to the order For example Ifthe name "Econ Lt is foflected as the credit provider then this name must appear in the table for the applicable loan, Any further detail can appear in brackets eer the name, for example ~ “Edcon Lis le)” 5, INTEREST RATE(S) ‘The interest ates on he order and acceptance ltler must nol exceed maximum nierest aes ‘alowed by the NCA, The date of the acceptance lee wl be relevant to determine the ‘maximum rte thal wes applicable atthe ine The nerest a formula inte NCA regulations changed on 6 May 2016 - the new formula alows fora maximum ineest ale of 28% 2s fom that date. Only loans in the order of less than R000 and a repayment period nt exceeding 6 months can rele higher inves le, The curent maximum interest rate on unsecured creit agreements at from 29 March 2018 ¢ 27.50% per annum. ‘Applications which contain an interest rate exceeding the maximum rate willbe refused. The debt counsellor wil be required to lodge an entirely new application and again pay the fe once a satisfactory interest rate has been agroodto. [A higher interest rate will only be permite If the origina credit agreement agreed to clearly stats that this higher interest rat is fixed forthe period ofthe loan. A copy of Page Bol 15,rover? Debt review cansentchecklst Nay 2018. the orginal agreement must then be attached to the application to show the fixed Interest rate ayroed to, 6, MONTHLY SERVICE FEES ‘The montty save fs indicated on the acceptance leer mus also appear onthe oder ‘The monty sence fees must rot exceed the amount alowed by the NCA ~ curently REO cexcucng val. The order must only eect fos that appear inthe acceptance ltr. Fees that ‘2ppear en the cerificate of balance ee, must not be reected on the ode. the acrepance letter does noteflet any fees then they must aso not appear inthe over. the acceptance leter flats foes and futher clearly states thatthe insurancefes ar area incided {nthe monthly instalment then the words “Included in monthly instalment)" must be {typed in afterthe insurancelfe amount reflected onthe order, 7. INSURANCE PREMIUMS. the fesfingurance amounts are reflected on the acceptance leter but the eter does not state thatthe Feesineurance amounts are included in the instalment, then merely Feflect these lesfinsurance amounts onthe order. It the acceptnce later i unclear at to whather or not the insurance is included then regardit as eclud ‘Some Crelt Providers) vow that the insurance amount reflected on their later is Included in the monthly instalment. Debt Counsellor need be certain a to whether this fs the case wth any specific application or not. may not be that there is one size fits all practice among credit providers. '8, SIGNATURES ON ACCEPTANCE LETTERS very accepne letter must be signed by person on behalf the credit provide. Page 9 of 15,L votmottl 7 May 2018 8. CONCESSION PERIOD Itt payment acceptance on the fan is ony appcable fra certain period then this must be eat stated inthe dar under the repayment prod column Le. On Nedbank hone lars it wil oflen state tha the concession period is apoicable for 60 months only. The words "80 ‘month concession perid only" must than appear in the column indicating te repayment peti. 1 the full term ofthe payment period Is also reflected in the letter then this must be (60 month concession period only. Full term 240 months)". Nedbank eters often contain tis information. reflected on the order as well ~ for exampl ‘Some credit providers use the phrase "Concession period” as a standard inclusion in their laters. This phrase must thon be aed to the instalment amount inthe order for those loans ~FNB letters are an example of this. IF the acceptance letter fom the credt provider reflects cascading payments then all he insalmenis and perads as contained inthe aoseptance letter must appear inthe order. The ‘order must retect the accepted repayment arrangement as contained in he acceptance leer oad 40, ACCOUNT NUMBERS If the acceptance leter indicates edition information related tothe account number ‘then ths information must also be reflected onthe consent order. For example ~ FNB {otters often reflect - “Account number 1232322332233 (Previously 2354345544)" This Information must be reflected on the order exactly as per the rect Axl often incl “12322349 (0B 7204440)" This ational information must also be reflected onthe consent order. 2 ait Page 106115crear? VA Debt even case edt May 2018 +1. ACCOUNTING SYMBOLS ‘The order must reflect all the "R’ and “%" symbols where applicable. However, where the symbols ar elcid be op ofthe relevant column, these sys need not be related in the column against each fgure as goes wihout saying thatthe cokemn head already indicates whether its Rands or percentages “Amounts must be relecod eat and legibly wih spacas or commas between thousands and hundreds where applicable Le. "R412 238.23" RN1223223" nok R112200,25° 12, INCOME AND EXPENDITURE STATEMENTS. ‘The Income and expendire statement wil be assessed by 1 ‘confirm whether the mony suplus amount the consume has avaiable is suet lo pay ‘he ota monthly amount for al the oan. ‘efounal member to ‘The consumers age may be assessed fo canfim whether the loan repayment period wit ‘extend uni apariod when the consume may aroady be relied or unable o work. Theres no fixed pincple inthis regard but an appliaon which requires the consumer o sil be ‘epoved int thei 70's 9 80's may woll be refused as unreasonable, Al the Interest rates on the consent order are fixed interest rates. I the acceptance: leer sttes that the interest rate fs variable or subject tothe applicable contractual ‘tes then this must be clearly reflected on the order ~ ie. "670% (Varabe)” or 10.00% (variable, subject to contractual terms)". Edcon acceptances generally use the phrase “Varabl interest rate” in ll thir letters ~ the word “variable” must therefore be ‘added after the Intres rate amount 13, PRESENTATION ‘The consent order is an order ofthe Tribunal. must lok profesional, neat and tidy. ‘The alignment, spacing, font must be correct, Use the same font throughout the Page tH of 15= TMay 2018 document as per the template provided. The names of he credit providers and all the parties must be properly aligned and spaced, ‘While the deft order is owmed by the partes (especialy he Debt Counsellor; once that rat order is confimed by the Tribunal it becomes an order of the Tribunal. So, the standards ofthe Tribunal apply. 14, TRIBUNAL MEMBER DISCRETION “Tiounal members have a judi Bscreion to grant o refuse applications. Tibanal members \ilfurtber exercise ter ucla discret to vey and consider any infomation reaing tothe application, ‘The fact that orders may sometimes be granted, despite the application not fully complying with this cieular, does not imply or mean that it will abvays occu, Applications must fully comply wih each and every aspect of this circular. These are the standards required and need obo observed. CCorectons/Addlional information required from Tribunal Members — ‘Should 2 Tribunal Member request addtional information, make corredions on the order, query or require claty on any issue, 2 return dat wl be indeated on the allocation form forthe debt counsellor to provide the required information or corected order. Should the information not be provided or the order corrected by the required date the application wil be refused 15, TRIBUNAL CASE LAW REFERENCES ‘The Tbunal has isueé a numberof judgments retain to debt review appcaions. See safc forall NT judgment, ‘The mos levant cases canbe sunmarsed as flows — ‘Bole v Nedbank and others (NCT/632622010185/1INCA) 2016] - Appeal applied or 2 vation of a consent order based on alate accepiance ltr rom a rel prover fora ower insallmen. Th later accepanoe ler wa dated ate the err was granted. The appeation Page 120115,Cieular? L Debt review consent checks T May 2018 ‘was brought previously an refused. The appian brought the sare application again. Kt was held thatthe previews judgreet ranted was final and a second application could not be brought again on ie same fais, Nedbank Lid v Marumo and Others (NCT/76412013/165((PINCA) [2013] ZANCT 35 (22 Cctober 2013) - Ser 138 order rescinded due othe credit provider not having agreed to the proposal made bythe debt counselor (Charles and Another v Ansa Bank Lind end Otters (NCT/S1206/20‘4165/1NPINCA) 2014 ZANCT 17 (20 May 2014) - Our velused due oe a consent order not being atached 6 the application 32 and Another Diet hers (NCTI267/2072/ 4B PINCA) [2013] ZANCT 27 (@ Seolember 2073 - Trbura four that members can request ny infomation rating to 30 ‘appliaon, incudnginlormaton pening to wheter the consumer Is able to ard the ‘agreed repayments. The application for a consent order can further be relused onthe basis ‘hal he consumer canal aod the repayments apreed on. ‘De Souza v Standard Bank of Souh Ace Lined (NCT/917672013/185(/P.NCA) [2013 ZANCT 44,11 Decomber2013)~ A change nthe consumer’ financial poston doesnot fm ‘2 bai ora variaton of rescsslon ofa consent order. The NCA however now does prove {or certain croumstnces whece a consumer may apply o a debl counselor fora clearance caiteate~ Sec 71 (1) ofthe NCA) Moleme v Wesbant Limied (NCT/8589/2019/651) (2 747 (20 Noverbor 2019] Tibunal fond that one cannot al Ian accounts which were previously ited fom the aplication, Ith egal application for he consent order oited to include certain loans ‘one cannot vay te order and ine tesa loans at alae lage Cane v Standard Bank Ld and Others (NCTIZ637/2019/165) [2013] ZANCT 37 (90 October 2013) = The consune had aready slled most this debs before the ord was granted, He ‘as longer in ancl fc a the time of he application. The Tribunal fund that the ‘order had been eroneously apple for by te debt counselor and was therefore rescinded Bank Limiee v Zulu and Olpers (NCT/Y715072014/165) 2015] ZANCT 7 23 Febru 2015) ~ Absa apped forthe ede: to be rescinded onthe basis hat the consumer was nat paying the debt in accordance with the order and had volun wikawn rom debi review. Tribunal found tat there 18 no basis in sec 165 for rescinding the ower under these Crcumstanoes. One cannot voluntary wihdraw from debt review once an order has been rade, (ts submited tat Sec 88(3()) ofthe NCA provides for this sion ~ the ce Provider may commence ligation or enforcarent of te lan agreement the consumer does ‘ot comply withthe order ofthe court er Trbunal.Teteore the order doesnt ave to be rescinded) Nedbank Lined » Mbit and Otbrs (NCT/N7149/2014168) [2015] ZANCT 6 (23 Febna 2015) - Nedbank zplie ea varabon ofthe orginal repayment structure agreed fo, Thenew structre woud reali the debt being paid within 38 menihs 26 opposed to the 78 months Page 13015cot LL vnnrenii May 2018 original agreed to. The Tribunal refused the application as Nedbank could no provide a basis for such a varaion in ems of econ 165 of te NCA. Van Vuuren v Nedbank Lied and Others (NCT/1449520;4/48(1K) NCA) 4) ZANCT £298 Seplember 2014) ~ Te Teunal commented onthe axpleaton of secon 103(5) ofthe [NCA (the so calle stator in duplum rue). The Tbunalcormrented thal section 10315) does not appl tothe agreed lan repayment in debt rearrangement consent order, LUntece v Necbonk Usted and Otrs(NCT/144942014/40/1KP) NCA) (2014) ZANCT 31 (2 Senlembsr 2014) ~ The Pesfing member refused the epplcaton for a censent order on the basis fa he credit provider was not properly descibed inthe raft consent order. On ‘appeal he Trbunal found tha the refusal could be set aie. Furr, any problems withthe Cesciption ofthe credit prover coud reasonably be saved by a drectie or query to the applicant. See aso Pettenbuger- Perwald v JOG Trading (Pty) Limted and Otors (wor/7eae2014/148(() [2015] ZANCT 1 (11 February 2018) SATaxi ti 7 T15621/20127651 94 2013] ZANCT 28 (1 November 2019) The applicant in the mater ha fled an answering aida opposing the orga appiaion fr the conse arr. The erdar was gana without the Presiding member being aware that an answering afd hed been fled by te Applicant. “Tw ordr granted was sot aside. Pretorius v Sanlom (Pv Limited and Others (NCT/494/2014146/1NP) NCA\ (2014) ZANCT 40/8 September 2014) - The Presiing member reused to ran the consent cer appicaon ‘ue tothe consumer being unable to afr he repayments agreed to, The Tbunal confimed the derision of te member on appeal and confrmed tat it was the debt counselor's responsibilty to presen ear and unarbiguous information regarng the franca positon of the consumer. (This approach was confmad in vaous ob appeals before the Tribunal by the same applcant on the same bass - See Plleturaer-Perwad v Absa Bank Limited and Na4a(t) 014) ZANCT 49 (18 No 4) " if INCT/IS5412014/46(1) 2O%4) ZANCT 47 (October 2014) ‘ames v Absa Bank and 01 1246 MINCA) (2013) ZANCT 1 (17 Ja 2013) ~The Trunalrefsed to grat an order allowing an erst ral (0%) which exceeds ‘the maximum rate set down in the NCA. First National Bank, A division of Fistrind Bank Limited v Lube and Others (NCTr86599/2097/165(1 INGT 114 (7 October 2017) — The credit provider applied for a resclsion of a consent order on the basis that the monthly payments ‘agreed to on the loan wil not settle the loan within the agreed time and were not ‘sufficient to cover the monthly interest on the loan The credit provider submited that ‘the High Court judgment of Nedbank Limited v Jones aad Another [2016] ZAWCHC 139 ‘was applicable. The Tribunal could therefore not order areduction inthe intrest ate on ‘the loan and the order was therefor uta vires. The raunal found thatthe Nedbank v Jones judgment was not applicable to a consent order. The credit provider could not Page 140f 15TMay 2018 ‘show any basis for rescinding the order ~ which was agred to by the partes at the time. The application 10 rescind the order was refused, The credit provider was to ensure that comple withthe consent order ofthe Tribunal LRABOTAPL 7 May 2018, REGISTRAR Page 15 15