Debt Counseling

[Tweefo]

Our local paper is full of ads for debt counseling / relief. What is the angle? Surly you don't want to do business with people that can't pay their debts? Are these lawyers picking at the carcass?

[Jane of the Jungle]

I've got the feeling a person would find him selves in even greater financial trouble
after these people's assistance, loan Sharks if you ask me!  I think their solution to your short term financial trouble would be, offering you a long term loan over a 10-15yr period.  All of us know the ridiculous amount of interest such loan can come to. (almost like a home loan, only MUCH higher interest)  Suppose some people cant resist taking this easier way out!  Problem is, if you are prone getting yourself into debt, you would find yourself in exactly the same situation soon and this debt counselors are fully aware of and they are still willing to loan you the money! (The counseling would most possibly take up 1 hour and the time spend on the contracts 3 hours)

[Slowpoke]

A rather silly piece of legislation, the National Credit Act, 2005, which came into operation some time ago, regulates what happens if a consumer gets over-indebted. The Act is so badly written that it took a few High Court rulings to sort out the process. In essence, a over-indebted consumer can approach a debt counsellor who, for a fee, will investigate the matter and make recommendations to a Magistrate's court. The court can find that the consumer is indeed over-indebted and make a re-payment order. Alternatively, the court can find that the credit provider was reckless in granting credit and lower the payment that has to be made.

The advantage to the consumer is that the credit provider cannot sue for the debt (which raises legal fees and costs). The advantage for the credit provider is that he will get some of his money back. The advantage to debt counsellors, who have to be qualified and registered, is that he gets his fees from the consumer.

Some counsellors will be honest and provide a good service to good people who have fallen on hard times. Others, well ... Lawyers will, of course, take the gap in the market but otherwise qualified people will also get on this train.

More information can be found on the National Credit Regulator's website. (Another governmental agency you and I have to pay for!)

[Mefiante]

There’s also the lending institutions who are protecting their own interests by offering debt-counselling services.  They are in a good position to judge which of their clients are in danger of defaulting on loan repayments.  These counselling services are thus intended to be pre-emptive: help the client before s/he gets him-/herself and us into trouble.

The morality is entirely different can of grubs.

'Luthon64

[Tweefo]

It sounds more and more like vultures (lawyers) coming to feed. I apologise to lawyers in advance but you profession is asking for it .

Bob the truck driver is driving down the road and who cross the road right in front of him? The lawyer acting for his ex. Bob lost his car, his house, his dog and his dignity! So his foot accidentally slip off the brake pedal and onto the accelerator. There was a thump and the world had one lawyer less. Bob now feel great. Humanity owe him one and when he see a broken down car a little further on he stop to help.
Turns out to be a priest. A spare part is needed to fix the car and Bob offer to give the priest a lift to town. As they came into town another lawyer is crossing the street. Bob aim his truck at him but at the last moment he realise who is sitting next to him. He swerves back again, thought he is missing the lawyer but there was an ominous thumb. The priest said "Don't worry my son, I got him with the door"

[Slowpoke]

Not the lawyers this time, Tweefo.

This whole thing was sparked by irresponsible consumers getting into debt. The lawyers will get a smaller slice of the pie with the implementation of this legislation as they will have fewer instructions to sue for debt.

In any event, the morality of the issue is much more interesting than the mechanics. In my view, the government has simply removed the principle of responsibility of the individual for the repercussions flowing from his own decisions.

I think that courts will have little sympathy for irresponsible lenders on the one hand and and irresponsible borrowers on the other. We have just seen the court dismiss Cezanne Visser's pathetic defence of "it's all his fault" and I think that we, as a society, are fed up with excuses for not accepting responsibility for our actions.

[Faerie]

Our local paper is full of ads for debt counseling / relief. What is the angle? Surly you don't want to do business with people that can't pay their debts? Are these lawyers picking at the carcass?

Yes and no.  Before the new act came into being, you could apply for voluntary administration, which basically meant that a lawyer would receive your salary, work out your budget, pay your debtors and give you whatever was left over. This process would take place over a 5 year period if memory serves me right, your debtors could not prosecute you during this period. Payment to the lawyers to keep the vultures at bay (which is basically what this entailed) was generally a percentage of the total debt amount being managed.

I would imagine its a similar scenario playing out these days under the guise of debt counselling.  Rather go to your bank, they're obligated to do it for free.