Withdrawal from Debt Review

1 Withdrawal from Debt Review Terminology It is important to clarify the terminology used in this document: Termination by Debt Counsellor: This means terminating the Debt Review which includes removing the Debt Review status of the Consumer from all Credit Bureaus. Withdrawal by Debt Counsellor: Means ending the provision of Debt Review Services to a Consumer which does not include removing of the Debt Review Status from all Credit Bureaus. Termination by the Consumer: This means terminating the Debt Review which includes removing of the Debt Review status of the Consumer from all Credit Bureaus. Withdrawal by the Consumer: Means ending the Debt Review Service provided by a Debt Counsellor to that Consumer which does not include removing of the Debt Review Status from all Credit Bureaus. Transfer: Means the Transfer of a Consumer currently under Debt Review from a Registered Debt Counsellor to another Registered Debt Counsellor. 1. Introduction The National Credit Act ( NCA ) provides guidance on the statutory powers of a Debt Counsellor regarding the terminating of a Debt Review matter once the Consumer has applied for Debt Review in terms of Section 86(1). This matter was considered in the Rougier vs Nedbank Limited Judgment. This matter will be discussed in more detail below. The abovementioned Judgement did not deal with the issue of whether a Consumer may terminate from Debt Review once they have applied in terms of Section 86(1). The NCA, in Section 86(10), makes provision for a Credit Provider to terminate a credit agreement from Debt Review but the NCA does not make any provision for a Consumer to terminate a Debt Review once they have applied for Debt Review in terms of Section 86(1). 1.1. Termination by the Debt Counsellor In the Rougier vs Nedbank Limited Judgement the Court has considered the NCA in respect of its interpretation of inter alia Section 86 of the NCA. It was held that once a Consumer has made an application for Debt Review to a Debt Counsellor in terms of Section 86(1), the Debt Counsellor may do only three things, namely: a. Reject the application (if the Debt Counsellor concludes that the Consumer is not over indebted); or b. Recommend to the Consumer and the Credit Provider that they should voluntarily agree on a debt rearrangement plan (if the Debt Counsellor concludes that although the Consumer is not over indebted, but is nevertheless experiencing, or likely

2 to experience, difficulty in satisfying all the Consumer s obligations under credit agreements in a timely manner); or c. If the Consumer is over-indebted the Debt Counsellor may issue a proposal to the Magistrates Court recommending that the Court make either or both of the following orders: i. One or more of the Consumer's credit agreements be declared reckless; and ii. That one or more of the Consumer's obligations be rearranged (as per Section 86(7)(c)(ii)). In this regard, it is clear that there is no provision in the NCA for a Debt Counsellor to terminate a Debt Review once the Consumer has made an application in terms of Section 86(1) and the Debt Counsellor is limited to one of the three "options" as set out above. In terms of this Judgement any act by the Debt Counsellor to terminate a Debt Review would be ultra vires the powers of the Debt Counsellor. In this regard, a Debt Counsellor is a legislatively created entity and only has the powers and authority provided to it by the NCA. The Court also held that in terms of Section 88(3) as read with Section 86, a Credit Provider would be barred from instituting action against a debtor until one of the following has occurred: a. Where the Debt Counsellor rejects an application and the Consumer does not thereafter apply to the Magistrates Court for an order in terms of section 86(7)(c) of the NCA within the required time frame; or b. Where a Credit Provider terminates the Debt Review process on notice if more than 60 days has elapsed after the Consumer applied for Debt Review1; or c. If the Court determined that the Consumer is not over indebted or rejects the Debt Counsellor s proposal or the Consumer's application; or d. If a Court has made an Order rearranging the Consumer's obligations or where the Consumer and Credit Provider voluntarily enter into an rearrangement plan and all of the Consumer's obligations under the credit agreements are fulfilled (unless the Consumer fulfils the obligations by way of a consolidation agreement); or e. If the Consumer defaults on any obligations in terms of a rearrangement plan agreed to between it and the Credit Provider or as ordered by a Court/Tribunal. 1 If the National Credit Amendment is adopted Credit providers will be unable to terminate such review if such review is filed in Court as contemplated in terms of section 87.

3 2. Current Market Practices There are currently a number of market practices where a termination process is taking place and these practices may not be in line with the requirements of the NCA. In many cases these termination practices are unlawful. a. Consumer s termination before Court Order is in place: Debt Counsellors confirmed that 20% of Consumers who apply for Debt Review in terms of Section 86(1) each month have no intention to remain under Debt Review and they terminate the Debt Review after the expiry of 60 business days. On receipt of the notice received from the Consumer the Debt Counsellor then terminates the Debt Review. The Consumer then applies for Debt Review with the next Debt Counsellor. During this process the Consumer pays nobody. This action is unlawful for two reasons. The Debt Counsellor has no statutory power to terminate the Debt Review and the Consumer help themselves to repeated payment holidays. b. Consumers request for transfers: In some cases Consumers are not satisfied with a particular Debt Counsellor and request a transfer to a new Debt Counsellor. c. Consumer termination after Court Order is in place: In some cases the Consumer selects to stop making any payments as agreed in the Debt Review Court Order and also instruct the Debt Counsellor to terminate the Debt Review. In other cases a Consumer selects to end the services of the Debt Counsellor but continues to pay Credit Providers (and not the Debt Counsellor) as per the Court Order. Where this is the case the Consumer instructs the Debt Counsellor to terminate the Debt Review. Where the Debt Counsellor accedes to this termination instruction, it removes the Debt Review status of the consumer from all the Credit Bureaus and this then allows the consumer to apply for more credit while he/she continues to pay the reduced Debt Review payments to all its existing creditors in terms of the Debt Review Order. This termination is ultra vires because The Debt Counsellor has no statutory power to terminate the Debt Review. In some cases Consumers request a transfer to another Debt Counsellor after the Court Order has been obtained. d. Termination by Debt Counsellor: When a Consumer, who has applied for Debt Review in terms of Section 86(1), fails to co-operate as required in Section 86(5) of the NCA (which includes failure to pay for services rendered) the Debt Counsellor would end the service provided to the Consumer in terminating the Debt Review. This action by the Debt Counsellor is ultra vires because the Debt Counsellor has no statutory power to terminate the Debt Review. e. Credit Provider action: Credit Providers contact the Consumer who has applied for Debt Review in terms of Section 86(1) with a promise of new debt on condition that the Consumer terminate the Debt Review. These Consumers then request the Debt Counsellor to terminate the Debt Review. This termination is ultra vires because the Debt Counsellor has no statutory power to terminate the Debt Review.

4 In other cases Credit Providers would threaten a Consumer with legal action unless the Consumer terminates the Debt Review. These Consumers then request the Debt Counsellor to terminate the Debt Review to prevent legal action or termination by the Credit Provider. This termination is ultra vires because The Debt Counsellor has no statutory power to terminate the Debt Review. Some Credit Providers would, especially on Home Loans, would agree on a voluntary repayment arrangement on condition that the Home Loan is excluded from Debt Review. In these cases Consumer would request the Debt Counsellor to either exclude the Home Loan from Debt review or to terminate the Debt Review. This termination is ultra vires because the Debt Counsellor has no statutory power to terminate the Debt Review. The NCA also does not make provision for the exclusion of any Credit Agreement from Debt Review the Debt Counsellor or Credit Provider has no statutory power to exclude any Credit Agreement from Debt review unless a valid Section 129 notice has been issued by the Credit provider and the debt is then excluded in terms of this Section 129 notice or a valid Section 86(10) termination has been issued by the Credit Provider. In terms of a previous voluntary Industry agreement, Debt Counsellors were allowed to terminate a Debt Review but it is clear that the abuse of this opened Debt Counsellors to undue risks. For example where a Debt Counsellor terminates a Debt Review this enables the Consumer to take payment holidays and sanction the approval of new debt due to the fact that the Debt Review was incorrectly terminated. 3. Previous Industry agreement on withdrawals and transfers Industry participants have agreed on an informal practical transfer and withdrawal process for: Consumer withdrawal Pre- Court Order. Consumer withdrawal Post- Court Order. Withdrawal by the Debt Counsellor pre- Court Order Withdrawal by the Debt Counsellor post- Court Order Process for transfer pre- Court Order. Process for transfer post- Court Order. A form 17.4 and form 17.7 was agreed and the voluntary process was implemented. This voluntary industry agreement should be cancelled and replaced by this document. 4. Industry agreement on Termination, Withdrawal and Transfers Termination by Debt Counsellor: Once a Consumer s Debt Review application has been accepted in terms of Section 86(1) the Debt Counsellor has no statutory power to terminate the Debt Review. Termination by Consumer: Once a Consumer s Debt Review application has been accepted in terms of Section 86(1) the Consumer cannot terminate the Debt Review.

5 Withdrawal by Debt Counsellor: Once a Consumer s Debt Review application has been accepted in terms of Section 86(1) the Debt Counsellor may end his or her service to the Consumer if the Consumer fails to co-operate despite a reasonable request by the Debt Counsellor to co-operate. In cases where the Debt Counsellor ends his or her service, the Consumer remains under Debt Review without a Debt Counsellor. In such instances, the withdrawing Debt Counsellor cannot remove the Consumer s Debt Review status from the Credit Bureaus. It is in the interest of Consumers to find another registered Debt Counsellor and to request a transfer. Withdrawal by the Consumer: Once a Consumer s Debt Review application has been accepted in terms of Section 86(1), a Consumer may decide to end the service of the Debt Counsellor. In cases where the Consumer ends the service of the Debt Counsellor, the Consumer remains under Debt Review without a Debt Counsellor. It is in the interest of Consumers to find another registered Debt Counsellor and to request a transfer. Transfer of Debt Review: In cases where the Consumer has ended the service of the Debt Counsellor or the Debt Counsellor closed his/her practice or where a Debt Counsellor has made arrangement for the transfer of all Consumers in his/her practice or where the NCR sees fit to transfer a Consumer to another Registered Debt Counsellor, the request for transfer should be allowed and facilitated by all parties involved. Clearance Certificate: A Debt Counsellor may issue a Clearance Certificate, in terms of Section 71 of the NCA once all the debt has been repaid. 2 Terminations by Credit Providers: A Credit Provider may terminate a Credit Agreement from the Debt Review after the expiry of 60 business days. 3 Consumer termination in terms of the NCA: Currently the NCA provides no guidance to allow a Consumer to terminate their Debt Review. An amendment of the NCA will be required if a Consumer should be allowed to terminate a Debt Review. 5. Industry Process Agreement on Termination and Withdrawal 5.1. Pre Court Order In this scenario the Consumer s Debt Review Application has been accepted by the Debt Counsellor in terms of Section 86(6). 5.1.1. Withdrawal by the Consumer: A Consumer may at any stage end the service of a Debt Counsellor. 2 If the National Credit Amendment is adopted a Debt Counsellor will be able to issue a Clearance Certificate if the Consumer can demonstrate financial ability to satisfy every current obligation under every credit agreement. 3 If the National Credit Amendment is adopted Credit providers will be unable to terminate such review if such review is filed in court as contemplated in terms of section 87.

6 If a Consumer wishes to end the service of the Debt Counsellor, written notice must be given to the Debt Counsellor to end the service and the reasons why. The Debt Counsellor must retain this written instruction from the Consumer and inform the Consumer in writing of the following: Consequences of ending the Debt Counsellor Service. That the ending of the service of the Debt Counsellor does not mean that the Debt Review has been terminated. The Debt Counsellor has no statutory power to remove the consumer s Debt Review status from the Credit Bureaus. This means that the Consumer will remain under Debt Review despite the ending of the Service. Credit Providers may take legal action on agreements that are in default. The Consumer is still liable for Debt Counselling and Legal Fees as per the approved NCR guidelines. It is in the Consumer s interest to arrange for a transfer to another Registered Debt Counsellor with immediate effect. Where a Debt Counsellor has already lodged a Debt Review Application the Debt Counsellor will be required to file a notice of withdrawal to all affected parties. The Consumer is required to carry the cost of this withdrawal notice. It is recommended that the NCR amend its Debt Help system to enable Debt Counsellors to notify the NCR when a Consumer has ended the service of the Debt Counsellor. This notification to the NCR should not result in the removal or termination of the Debt Review status from Credit Bureaus. Until this enhancement is in place the Debt Counsellor is not required to update NCR Debt Help. 5.1.2. Withdrawal by the Debt Counsellor: Where a Consumer fails to co-operate with the Debt Review process as defined in Section 86(5), the Debt Counsellor may withdraw his/her Debt Review services to that particular Consumer. A consumer acting in bad faith includes the following: Dishonesty. Lack of co-operation. Not responding or adhering to reasonable requests by the Debt Counsellor. Non-payment of the Debt Counselling and Legal Fees. Non-payment to Credit Providers in terms of proposed repayment plan. Any other behaviour amounting to abuse of the process. The Debt Counsellor must inform the Consumer of the withdrawal of Service in writing and this notice should include the following information: Reason for withdrawal of the Debt Review Service. Provide Consumer with option to initiate steps to avoid withdrawal of the Debt Counsellor s Service within 10 business days.

7 Inform the Consumer that Credit Providers may take legal action on any agreements in default. Inform the Consumer that despite the ending of the Debt Review Service the Debt Counsellor does not have the statutory power to terminate the Debt Review. This means that the Consumer will remain under Debt Review and the Debt Review status listing at Credit Bureaus will remain in place. The Consumer is still liable for Debt Counselling and Legal Fees as per the approved NCR fee guidelines up to the date of that the Debt Counsellor withdraws its service as per the approved NCR fee guidelines. Should the Consumer fail to co-operate after the expiry of the notice period, the Debt Counsellor should inform the Consumer, in writing, as follows: That the Debt Counsellor has ended his/her Debt Review service from the effective date in the notice. Inform the Consumer of the amount of fees that is payable to the Debt Counsellor in relation to Debt Counselling and Legal Fees as per the approved NCR fee guidelines and that non-payment may result in the commencement of legal action. Inform the Consumer that, despite the ending of the Debt Review Service, the Debt Counsellor does not have the statutory power to terminate the Debt Review. This means that the Consumer will remain under Debt Review and the Debt Review status listing at Credit Bureaus will remain in place. Remind the Consumer that it is in his/ her interest to source a replacement Registered Debt Counsellor with immediate effect and to request a transfer. Where a Debt Counsellor has already lodged a Debt Review Application, the Debt Counsellor will be required to file a notice of withdrawal to all affected parties. The Consumer is required to carry the cost of this withdrawal notice. It is recommended that the NCR amend the Debt Counselling Fee Guideline accordingly. It is recommended that the NCR amend its Debt Help system to enable Debt Counsellors to notify the NCR when a Debt Counsellor has ended the Debt Review Service. This notification to the NCR should not result in the removal or termination of the Debt Review status listing from Credit Bureaus. Until this enhancement is in place, the Debt Counsellor is not required to update NCR Debt Help. 5.2. Post Court Order In this scenario a Debt Review Court order has been obtained and the Consumer is required to make payments as per the Court Order. 5.2.1. Withdrawal by the Consumer: A Consumer may at any stage end the service of a Debt Counsellor subject to the following: a. Non-paying Consumer

8 If a Consumer wishes to end the service of the Debt Counsellor, written notice must be given to the Debt Counsellor to end the service and the reasons why. The Debt Counsellor must retain this document and inform the Consumer, in writing, as follows: That Credit Providers, as a result of the non-compliance to the repayment plan approved in the Court Order, can commence with legal action. That despite the ending of the Debt Review Service, the Debt Counsellor does not have the statutory power to terminate the Debt Review. This means that the Consumer will remain under Debt Review and the Debt Review status listing at Credit Bureaus will remain in place. Where a Debt Review order is in place and the Consumers ends the service of the Debt Counsellor, it is advisable that the Debt Counsellor file a notice in the Court file and to inform all parties. Remind the Consumer that it is in his/her best interest to source a replacement Registered Debt Counsellor with immediate effect. b. Paying Consumer If a consumer wishes to end the service of the Debt Counsellor, written notice must be given to the Debt Counsellor to end the service and the reasons why. The Debt Counsellor must retain this document and inform the Consumer, in writing, as follows: That Credit Providers, as a result of the Consumer s non-compliance to the repayment plan approved in the Court Order, can commence with legal action. That despite the ending of the Debt Review Service, the Debt Counsellor does not have the statutory power to terminate the Debt Review. This means that the Consumer will remain under Debt Review and the Debt Review status listing at Credit Bureaus will remain in place. If the Consumer wants to cancel the Debt Review Court order they may apply for the Debt Review Order to be rescinded in terms of Section 36 and rule 49 of the Magistrate Court Act. The Consumer is required to initiate and pay for the rescission application. This option may be successful if the Consumer can prove that they are no longer over-indebted. Remind the Consumer that it is in his/her best interest to source a replacement Registered Debt Counsellor with immediate effect. Where a Debt Review order is in place and the Consumer ends the service of the Debt Counsellor, it is advisable for the Debt Counsellor to file a notice in the Court file and to inform all parties. It is recommended that the NCR amend its Debt Help system to enable Debt Counsellors to notify the NCR when a Debt Counsellor has ended the Debt Review Service. This notification to the NCR should not result in the removal or termination of the Debt Review status listing from Credit Bureaus. Until this enhancement is in place, the Debt Counsellor is not required to update NCR Debt Help.

9 6. How can a Consumer get out of Debt Review Based on the provisions in the NCA, a Consumer s Debt Review will come to an end in the following circumstances: 6.1. Repayment of all the Debt and issuing of a Clearance Certificate A Consumer who has satisfied all obligations under every agreement that was part of the debt re-arrangement order or agreement in accordance to that order or agreement may, in terms of Section 71 of the NCA, apply for a Clearance Certificate from a Debt Counsellor. 6.2. Application to Court for rescindment of the Debt Review Order A Consumer may apply to a Court to rescind the Debt Review Order and request the Court to declare the Consumer not over-indebted. 6.3. When the Consumer can resume normal contractual payments If the National Credit Amendment Bill is approved by Parliament any Consumer who can resume normal contractual payments may leave the Debt Review by applying to the Debt Counsellor for a Clearance Certificate. Here certain issues need to be clarified, namely: a. Does this mean that repayment has to be up to date in terms of original credit agreement? b. Does the relevant credit agreement have to be restructured back to reflect the original contractual instalments? and, if so, c. What happens if the credit agreement was in arrears at the time the account was restructured in terms of the debt review proposal? d. What happens to the above arrears balances when the account is again restructured back as per the contractual instalments? e. What about the actual interest rate if this was reduced during Debt Review? f. What about the term of the contract if this was extended under debt review? 7. Transfer of the Debt Review Consumers have the right to change Debt Counsellors at any point in time. Likewise, it may be necessary for a Debt Counsellor to transfer one or more Consumers to another Debt Counsellor. In addition, some Debt Counsellors are de-registered by the NCR or no longer practice and the NCR then needs to allocate the affected Consumers to other Debt Counsellors. The following procedure should be adopted and implemented by all Credit Industry participants and a standard letter has been developed and has been included in the process (Annexure 1 Form 17.7).

10 7.1. Consumer initiates a Transfer to another Debt Counsellor (Pre- Application to Court) The Consumer could request a Transfer for a number of reasons: May move residence and appoint a Debt Counsellor closer to them. Could be unhappy with the existing Debt Counsellor. Could be unhappy with the transfer of his file from one Debt Counsellor to another. It must be noted that it is the Consumer that selects Debt Counsellor. A Debt Counsellor can therefore not unilaterally Transfer a Consumer to another Debt Counsellor without proper consultation. The Consumer should request the Transfer in writing and this can be submitted to the old Debt Counsellor and, should that Debt Counsellor not respond, the Consumer can then request the new Debt Counsellor to arrange the Transfer. The old Debt Counsellor is to notify the Credit Providers, NCR, Attorney, the new Debt Counsellor and the PDA of the Transfer request within five days of receipt of the request from a Consumer (Annexure 1 Form 17.7) by selecting the option below: a. The abovementioned Consumer has requested to be transferred to another Debt Counsellor with immediate effect. The details of the Debt Counsellor is provided below: Should the old Debt Counsellor not have submitted the notification within 5 days, then the new Debt Counsellor, on receipt of the Consumers written transfer request, must: Notify the Credit Providers, NCR, Attorney, the old Debt Counsellor and the PDA of the Transfer request within five days of receipt of the request from a Consumer by submitting the notification (Annexure 1 Form 17.7) by selecting the option below: b. The abovementioned Consumer has requested to be transferred to me with immediate effect. Unfortunately, the previous Debt Counsellor will not issue a Form 17.7 and the details of the previous Debt Counsellor is provided below: The new Debt Counsellor must complete and fax to DSG(NCR): Letter of consent signed by Consumer (include - Surname, Name, Contact number and Current Status). Copy of ID document of the Consumer(s); Copy of Form 17.7 notification. When a Consumer requests a transfer from one Debt Counsellor to another, the Debt Review process continues and so do the Debt Review time lines. For clarity, no termination of the Debt Review is taking place during the transfer process, provided the timelines are adhered to or the Debt Counsellor affected is able to obtain an extension of these timelines.

11 7.2. Consumer initiates a Transfer to another Debt Counsellor (Post Application to Court. Matter not yet heard) The same process should be followed as outlined in 7.1 above. The Debt Counsellor must notify the Attorney dealing with the file and, depending on the practice in the particular Region/Court: Provide a Supplementary Affidavit to notify all parties; and/or Request that an amendment to the Notice of Motion be affected. 7.3. Consumer initiates a Transfer to another Debt Counsellor (After Court Order) The same process should be followed as outlined in 7.1 above. The old Debt Counsellor should file a notice on the Court file of the request for Transfer. 8. Process for selling or transferring a Debt Counsellor book A Consumer can be transferred to another Debt Counsellor under the following circumstances: The Debt Counsellor could sell his client portfolio. The Debt Counsellor could cease practising. The Debt Counsellor could resign from the Company and be replaced. The Debt Counsellor could pass away. The Debt Counsellor could be declared insolvent. The Debt Counsellor could be de-registered by the NCR. 8.1. Debt Counsellor Selling/Transferring the Book to another Debt Counsellor (Pre Application to Court) The Debt Counsellor must notify the Consumer that he is transferring/selling the book to another Debt Counsellor and should provide full contact details of the new Debt Counsellor to the Consumer. The Consumer should be reminded that the Debt Review will continue and that the transferring of the Debt Review does not terminate the Debt Review. This letter must be sent to the Consumer 10 days before the Transfer happens. Where the Consumer does not respond or object to the Transfer to the new Debt Counsellor, then the process may continue. The Consumer can elect to be transferred to a Debt Counsellor other than the one that has been chosen by the transferring Debt Counsellor. The old Debt Counsellor must complete the notification (Annexure 1 Form 17.7) and this would need to be forwarded to all Credit Providers, the PDA, Attorney, NCR and new Debt Counsellor before the actual Transfer takes place. The old Debt Counsellor or new Debt Counsellor must select option C (reflected on the Form 17.7) below:

12 I confirm that I have transferred/sold my client base which includes the abovementioned Consumer to the Debt Counsellor mentioned below: The new Debt Counsellor must complete the notification and fax the following to DSG (NCR): Copy of the ID document of the Consumer(s); and The notification (Annexure 1 Form 17.7). Where bulk transfers do take place then this can be submitted in the form of an excel spreadsheet or by means of the notification (Annexure 1 Form 17.7). On receipt of the bulk notification or Form 17.7, the Credit Provider should, within 10 business days, advise the New Debt Counsellor of the status of the Debt Review application. This explanation of the status could include and is not limited to: If the application is still active. If the credit agreement has been terminated from the Debt Review. If the client has not been making payments. If no proposals have been received. If legal action has commenced. If legal action has been taken. Where applicable, the date on when the timelines are expiring The Debt Counsellor should then review the information received from the Credit Provider and then needs to make adjustments and respond to the Credit Providers within 15 business days (Providing information, submitting new proposals, withdrawing from the Debt Review etc.). The Credit Providers will continue to follow their internal processes and could issue a termination notice whilst the information is being processed by either party. The Debt Counsellor has 10 business days to respond to the termination notice and should submit the relative documentation and negotiate with the Credit Provider not to terminate the Debt Review where this is warranted. Both the Credit Provider and the Debt Counsellor should negotiate in good faith to reach an agreement that will be in the interest of all parties. The Debt Review process continues and so do the Debt Review time lines. 8.2. Debt Counsellor Selling/Transferring the Book to another Debt Counsellor (Post Application to Court - Matter not yet heard) The same steps as in section 8.1 above are to be followed. The Debt Counsellor to notify the Attorney dealing with the case and, depending on the practice in that particular region, the Court may require: A supplementary Affidavit signed by the new Debt Counsellor, or A change to the Notion of Motion reflecting the new Debt Counsellor s name.

13 8.3. Debt Counsellor Selling/Transferring the Book to another Debt Counsellor (After Court Order) The same steps as in section 8.1 above are to be followed. It is advisable for the Debt Counsellor to file a note in the Court file regarding the Transfer. 8.4. Debt Counsellor stops practicing This normally occurs when the NCR takes action against a Debt Counsellor and de-registers the Debt Counsellor or where the Debt Counsellor closes the business down and the Consumers are left without a Debt Counsellor representing them. The considerations required in this regard are: The state of the book being taken over in terms of documentation and processes followed under the old Debt Counsellor. Whether the Consumers paid the Debt Counsellor Fees and if they made payments to Credit Providers in terms of proposals submitted to Court or to Credit Providers. If Credit Providers terminated where no Court Order is in place. The Debt Counsellor system and PDA that the previous Debt Counsellor used. 8.5. Debt Counsellor stops practicing (Pre Application to Court) In these cases the NCR will intervene and provide the new Debt Counsellor and Credit Providers with a letter confirming that the Debt Counsellor is no longer practising and that they have requested the new Debt Counsellor to take over the book. The NCR appointed Debt Counsellor must notify the Consumer in writing of the transfer and the reason and should provide full contact details to the Consumer. The NCR appointed Debt Counsellor must complete Form 17.7 or provide an excel bulk transfer list and this would need to be forwarded to all Credit Providers, the PDA, Attorney and NCR together with a copy of the NCR letter. Where the Debt Counsellor has been requested by the NCR to take over these Consumers, then the New Debt Counsellor should select option D (reflected on the Form 17.7) below: I confirm that I have been requested by the NCR (see letter attached) to take over the abovementioned Consumer from the Debt Counsellor mentioned below: The NCR appointed Debt Counsellor must complete and fax to DSG (NCR): The NCR Letter confirming the Transfer. As this relates to a bulk transfer an excel spreadsheet under cover of a Form 17.7 to DSG (NCR). On receipt of the bulk notification or Form 17.7 the Credit Provider should, within 10 business days, advise the New Debt Counsellor of the status of the Debt Review application. The explanation of the status could include and is not limited to:

14 If the application is still active. If the credit agreement has been terminated from the Debt Review. If the client has not been making payments. If no proposals have been received. If legal action has commenced. If legal action has been taken. Where applicable, the date on when the timelines are expiring The Debt Counsellor should review the information received from the Credit Provider and then make adjustments and respond to the Credit Providers within 15 business days (Providing information, submitting new proposals, withdrawing from the Debt Review etc.). The Credit Provider s will continue to follow their internal processes and could issue a termination notice whilst the information is being processed by either party. The Debt Counsellor has 10 business days to respond to the termination notice and should submit the relative documentation and negotiate with the Credit Provider not to terminate the Debt Review where this is warranted. Both the Credit Provider and the Debt Counsellor should negotiate in good faith to reach an agreement that will be in the interest of all parties. 8.6. Debt Counsellor stops practicing (Post Application to Court) The same steps as in section 8.1 above are to be followed. Debt Counsellor to notify the Attorney dealing with the case and depending on the practice in that particular region the Court may require: A supplementary Affidavit signed by the new Debt Counsellor, or A change to the Notion of Motion reflecting the new Debt Counsellor s name Copy of NCR letter. 8.7. Debt Counsellor Stops practicing (After Court Order) The same steps as in section 8.1 above are to be followed. No update is required at Court to reflect the change of Debt Counsellor.

15 Annexure 1 DC Name Form 17.7 Registered Debt Counsellor. Registration number NCRDC00000000 To the Credit Department: 0 (0) unknown #N/A From: Name of DC Registered Debt Counsellor. Registration number NCRDC0000 Address Address Address Address Telephone: Facsimile Number: Date: 2/25/2011 10:55 Names of Consumer (s): Account Number: 0 ID Number (s) of Consumer (s): This notice serves to advise you that: NOTIFICATION TO ALL CREDIT PROVIDERS AND ALL REGISTERED CREDIT BUREAUS a. The abovementioned Consumer has requested to be transferred to another Debt Counsellor with immediate effect. The Details of the Debt Counsellor are provided below: Name of new Debt Counsellor: Telephone Number: Faxsimile Number: b. The abovementioned Consumer has requested to be transferred to me with immediate effect. Unfortunately the previous Debt Counsellor will not issue a Form 17.7 and the details of the previous Debt Counsellor are provided below: Name of old Debt Counsellor: Telephone Number: Faxsimile Number: c. I confirm that I have transfered/sold my client base which includes the abovementioned Consumer to the Debt Counsellor mentioned below: Name of new Debt Counsellor: Telephone Number: Faxsimile Number: d. I confirm that I have been requested by the NCR (see letter attached) to take over the abovementioned client from the Debt Counsellor mentioned below: Name of old Debt Counsellor: Telephone Number: Faxsimile Number: Signed at Little Falls on this 25 Day of February of 2011 Debt Counsellor.