What is Debt Mediation, Debt Management or Dispute Resolution?

Debt Mediation, also known as Debt Management or Dispute Resolution, is a debt solution targeted at South Africans who are struggling to make debt repayments, but are not yet classified as over-indebted.

Companies offering these services promise to negotiate with creditors on the consumer’s behalf in order to initiate a repayment plan.

The consumer thereby pays one monthly instalment to the Debt Mediation/Management or Dispute Resolution Company which then distributes the money over to the consumer’s creditors…hopefully.

The major and fundamental problem with “Debt Mediation”, and the countless other names it goes by, is that it is not recognised by the National Credit Regulator (NCR) as in it is not a legitimate legal process for paying ones debt back.

  • There is no form of legal protection or binding legal contract/agreement between the creditor and debtor which means that any given time the creditor can call the full outstanding balance of the debt concern into question, cancel the agreement in place and proceed with legal action (in terms of the National Credit Act no: 34 of 2005) against the consumer if the account in question is indeed in arrears.
  • There is no recognized or accredited Payments Distribution Agency ensuring that the money is distributed to the consumer’s creditors.
  • The majority of these Debt Mediation/Management or Dispute Resolution companies do not hold qualifications recognized by the National Credit Regulator in order to act in the capacity to afford proper regulated practices or clearance of the consumer’s debt.
  • The fees charged to administer this “practice” are not regulated nor listed in a legal capacity or any regulatory body. They are calculated and done so by the Mediators own discretion.

It has been a long held view that these companies offering these services do so in a way to circumvent the legal requirements, qualifications and strictures of the National Credit Act no: 34 of 2005 and National Credit Regulator.

It is a practice heavily frowned upon and not performed by individuals authorized in terms of the NCA to do so.

In November 2014 the NCR published a circular (No: 13), quick link to attached NCR PDF Circular (Voluntary Debt Mediation), on condemning the practice of Debt Mediation,

They had the following to say regarding the practice thereof:

  1. “The National Credit Regulator (NCR) is aware that the Banking Association of South Africa (BASA) and other industry associations are in discussions with various stakeholders to introduce voluntary debt mediation. The NCR stopped the implementation of voluntary debt mediation in 2012 because it undermines the National Credit Act 34 of 2005 (NCA) and statutory debt counselling and will prejudice consumers.
  2. The NCA makes provision for debt counselling and a mechanism for voluntary debt restructuring in section 86 which must be supported and used by all credit providers. These mechanisms protect both consumers and credit providers by ensuring debt restructuring which ensures that all credit providers are eventually repaid.
  3. The NCR does not support voluntary debt mediation and will not approve it under any circumstance. The NCR has written letters to BASA and other industry associations to cease all work relating to voluntary debt mediation.
  4. Credit providers, debt counsellors, credit bureaus and payment distribution agents are requested not to participate in discussions to introduce voluntary debt mediation. In particular, credit providers must continue using statutory debt counselling and allow all consumers to use statutory debt counselling.”

TALK TO US, WE CAN HELP!!!

Oyisa United Debt Specialists is therefore committed to assisting consumers struggling to make their debt repayments and facing financial difficulties, to solve their debt problems and empower them to take back control over their financial situation.

Therefore OUDS is willing to assist consumers in this predicament with a free service of a financial assessment, assist the consumer to organise an affordable, realistic and structured monthly budget and debt management plan thereby providing consumers with a guideline for eliminating and remaining out of debt. 

Benefits of OUDS Free service:

  • OUDS offers free, unbiased and expert advice on how to reduce debt;
  • debt management plan will enable clients to stay on top of their finances;
  • Debt repayment plans and budgets are tailored to the individual financial particulars of the client;
  • Educates consumers on how to reduce and manage debt their debt, empowering consumers to approach and negotiate payment terms with their creditors and constructively become debt free by gaining financial independence;
  • Helps consumers keep control of their money and make well informed decisions about monthly debt payments;
  • Supplies clients with structured and helpful debt management tools needed to gain financial independence;
  • Reduces debt repayment amounts and increases cash flow by managing debt.

Why consider Debt Counselling over Debt Mediation/Debt Management/Dispute Resolution?

First and foremost, as mentioned above Debt Management/Debt Mediation/Dispute Resolution, is not a recognized debt resolution service by the National Credit Regulator.  There is no legitimate legal protection offered with regards to your assets.

Debt counselling could offer an option for those who would like to become debt free while being able to offer legitimate legal protection to ones assets such as your home or car.

Debt counselling provides the opportunity to bring your monthly debt repayments down by as much as 30 – 50% (but Debt Counsellors have been able to negotiate reductions as much as up to 60% in the past). Professional Debt Counsellors can negotiate lower interest rates and fees with creditors. The outcome is one affordable monthly installment, making provision for you to cover your normal living expenses as well.

Remember above all else that you are not alone out there. Contact OUDS directly for more info on any of our effective Phalanx© services.

Free Call Back Service

We’ll call you for your complimentary debt assessment & action plan.

In terms of the National Credit Act No: 34 of 2005, Section 156(1)(a) & (b), by law we are not allowed to disclose any of your contact information to any third party; and we do hereby undertake to honour the Act in this regard.