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Table of Contents able of Contents
How do unpaid payments affect debt counselling?
When are accounts terminated from the debt counselling process?
A general timeline for an account to be terminated
What to expect from Credit Providers when payment is missed?
What does this mean for the client?
How can a default/termination scenario be remedied or avoided?
The term unpaid is used when a client has missed a payment(s) as acknowledged on our payments system.
How do unpaid payments affect a client, and does it involve any risk?
As with any account, when a payment is missed, it immediately creates an arrears balance. The risk is that the longer the account remains in arrears, the more likely it is to be terminated (removed) from the debt counselling process. Thus, it will lose the benefits of lower interest rates and installments.
When are accounts terminated from the debt counselling process?
Accounts are generally terminated from the process when payments have not been received for 60 business days or longer. A formal Notice of Default will be issued to the debt counsellor and the client to inform the two parties that an account(s) is in arrears, this should not be regarded as a negative protocol as both parties must be informed to remedy the situation. The Notice of Default will include the arrears amount and the outstanding balance.
A general timeline for an account to be terminated from the process will look as follows:
- 1st Unpaid – Telephone inquiries can be made by the creditor to the debt counsellor or client.
- 2nd Unpaid – Formal Notice of Default received
- 3rd Unpaid – Formal Termination Notice received
During this period clients may also expect communication from our Payments Team for each unpaid/missed payment. Our payments consultant will enquire about the reason for non-payment and will assist with setting up a payment arrangement.
What to expect from Credit Providers when payment is missed?
A credit provider will have the full authority to contact a client to obtain a reason for non-payment (or even short payment) when the client is in default of the debt counselling arrangement. They can call, email, SMS, or even send letters via post. Once an account is terminated, the credit provider will also have the full authority to impose the original interest rate and installment as per the initial credit agreement.
What does this mean for the client?
If an account gets terminated by the credit provider, the debt counselling agreement of the affected account will become null and void. Therefore, losing the benefits of lower interest rates, installments, and the debt being paid off in a shorter term. When an account is terminated the client will be liable to make payment as per the original agreement. If a client cannot commit to the original agreement it will negatively affect their credit profile and credit providers may place default listings on the client’s credit profile.
How can a default/termination scenario be remedied or avoided?
The best way would be to ensure that payments are made on time and in full. In the event of a missed payment, it would be advisable to catch up with the arrears by your next payment. If not, your debt counsellor will arrange with your credit providers to catch up on the arrears to avoid termination. The arrangement cannot be longer than 6 months.
Should a client experience a change of circumstance, please refer to the article on Change in Circumstance.