Debt review legislation states that once an individual is under debt review, their creditors cannot take legal action against them without permission from the court. This legal protection is provided under the National Credit Act (NCA) and is intended to protect over-indebted consumers from harassment and unfair debt collection practices.
When an individual applies for debt review, the debt counsellor will notify all their creditors of their intention to enter the debt review process. The notification will include details of the individual’s financial situation and the proposed repayment plan. Once a creditor has been notified of the debt review application, they cannot take any legal action against the individual for up to 60 working days.
During this 60-day period, the debt counsellor will work with the creditor to try and reach an agreement on the proposed repayment plan. If an agreement cannot be reached, the debt counsellor may refer the matter to a Magistrate’s Court for a ruling.
If the court approves the proposed repayment plan, it becomes a court order, and the individual is legally required to make the agreed-upon payments. The court order also provides legal protection to the individual, as it prohibits their creditors from taking any legal action against them without permission from the court.
The application for debt review provides immediate legal protection to over-indebted consumers, ensuring that they are not unfairly harassed or subjected to unfair debt collection practices by their creditors.