Indebted consumers can choose mediation: NDMA

Over-indebted consumers with complaints about their credit providers can seek debt mediation, says the National Debt Mediation Association (NDMA).

"Consumers are not aware that the NDMA provides free debt mediation and a complaints handling service," CEO Magauta Mphahlele said in a statement.

The NDMA is a non-profit organisation which tries to help consumers to get out of debt through mediation and is allowed to resolve complaints against credit providers who subscribe to the industry code of conduct.

"Complaints can be about the handling of the debt counselling process by the credit provider as well as how they handle consumers experiencing payment difficulties," said Mphahlele.

The National Credit Act offers consumers various legal and voluntary options to resolve debt problems including direct negotiation with their credit providers or approaching a debt counsellor.

"For those under debt counselling, the majority of cases [we receive] relate to the process going wrong and as a result credit providers resorting to legal action to recover what is owed to them," said Mphahlele.

Many of these complaints related to the termination of debt review which was usually followed by legal action to realise the asset.

In the cases in which the NDMA intervened, credit providers had agreed to reinstate 47 percent of terminated cases back into debt review, and it had recovered 54 percent of vehicles repossessed and 48 percent of houses due for auction.

Mphahlele said where cases had a negative outcome, it was usually because the consumer had sought assistance too late, or could not afford restructured payments, or made sporadic payments, or paid less than what had been agreed under the debt review process.

In other cases credit providers appeared unwilling to negotiate with consumers on a case-by-case basis.

"They issued standard responses and were slow to respond to requests for help," Mphahlele said.

"Many credit providers still operate in silos, with product, debt review and legal departments all operating separately and little co-ordination or sharing of information."

Debt counsellors were also to blame in some cases where they had been slow to implement new or revised debt review proposals, not kept the consumer up-to-date or failed to provide the required documents to credit providers.