Debt Review is a powerful process designed to help over-indebted consumers regain financial stability while offering legal protection against creditor action. However, it is a two-way commitment. If a client chooses to stop paying their monthly instalments under the agreed repayment plan, it can have serious consequences for both the client and the Debt Counsellor.

At SS Debt Counsellors, we understand that life circumstances can change. If you’re struggling to keep up with payments or have concerns about the process, reach out to us. We’re here to help you find solutions and stay on track toward a brighter financial future.

Here’s what happens when payments are halted and the rights of the Debt Counsellor in such scenarios.

The Consequences for the Client  :

1. Loss of Protection from Creditors

One of the key benefits of Debt Review is the legal protection it offers. Creditors are prohibited from taking legal action against clients while they adhere to the repayment plan. If payments stop, creditors are notified, and the client loses this protection, allowing creditors to proceed with legal action, such as repossessions or court judgments. 

2. Termination of the Debt Review Process

Failing to make payments as per the repayment plan may result in the termination of the Debt Review process. The Debt Counsellor is obligated to notify both the client and creditors when non-payment occurs, and this can lead to the formal cancellation of the arrangement. 

3. Damage to Credit Score

Non-payment under Debt Review may lead to the client being flagged for further defaults on their credit profile. This not only damages their credit score but also impacts their ability to access future credit. 

4. Accumulation of Debt

Stopping payments doesn’t erase debt. Instead, the debt continues to accumulate with interest and fees, making it even harder to settle over time. 

 

Responsibilities and Rights of the Debt Counsellor:

1. Notification of Non-Payment

Debt Counsellors are required to inform both the client and creditors about any non-payment. This ensures transparency and allows creditors to consider their options regarding the client’s accounts. 

2. Termination of Services

If a client refuses to pay despite reminders and efforts to resolve the situation, the Debt Counsellor has the right to terminate the debt review process. This decision is made to protect the integrity of the process and avoid unfair risks to creditors or the Debt Counsellor’s professional standing. 

3. Legal Rights

While Debt Counsellors primarily act as mediators between clients and creditors, they also have the right to enforce terms of their agreement with the client. If a client defaults and owes outstanding counselling fees, the Debt Counsellor may pursue legal action to recover these costs. 

4. Reinstatement Assistance

If the client later chooses to resume payments and rectify their situation, the Debt Counsellor can assist with reapplying for Debt Review. However, this may depend on the willingness of creditors to cooperate a second time. 

 

How to Avoid These Challenges.

For clients considering stopping their payments, it’s essential to remember that Debt Counselling exists to help—not hinder.

 If a financial crisis arises: 

– Communicate Immediately: Inform your Debt Counsellor of your challenges. They may be able to negotiate an amended repayment plan that aligns with your circumstances. 

– Stick to the Process: The Debt Review process is designed to make repayments manageable. By staying committed, you’ll avoid legal action and continue moving towards financial freedom. 

– Ask for Guidance: Your Debt Counsellor is your ally. They can provide advice and explore solutions tailored to your financial situation. 

 

A Lifeline to Financial Stability  :

Debt Review is not a quick fix; it’s a pathway to long-term financial health. For clients, the key is to remain engaged and committed. For Debt Counsellors, it’s about offering support while upholding the integrity of the process. Together, this partnership can achieve financial independence for the client and maintain the trust and professionalism within the industry.