Seeking help for your bad debts

In this week’s blog we are going to cover how a consumer can seek help for these bad debts by way of obtaining a debt restructuring court order, such as Debt Review or an Administration Order, depending on your personal circumstances.

A debt restructuring court order is obtained through the Magistrates Court which protects the debtor’s assets and income. This can be done when a debtor makes an application in the prescribed format, through an accredited Debt Review Counsellor or Administrator to create a formal and legally-binding agreement between the debtor and their creditors to pay back the debts over a period of time. The application will include (but not limited to) the following details:

• The debtor’s personal details
• Employment details
• A Statement of the debtor’s financial affairs
• Proposed repayment plan
• Consent of the Administration and / or Debt Review

A copy of this application with all supporting documentation will be delivered to each creditor within the legal required notice period to allow them to object the application accordingly. A court date will be set for this application to be heard where the debtor and their lawyer (arranged by their Administrator or Debt Counsellor) will appear in the Magistrate’s Court on the date provided by the clerk of the court. The application will be heard by a Magistrate where any creditors may also attend should they wish to object to the debt listed in the application – providing that they furnish proof of the same. The Magistrate will then grant the application, adjourn (postpone) it for a later date or decline it.

If the application is granted, the Administrator or Debt Counsellor must then inform each and every creditor of the approved order.

In the case of Administration, they will also need to inform the debtor’s employer as their monthly instalment will be paid by means of a garnishee order unlike a Debt Review Order which is paid by way of a direct debit from the Debtor’s bank account. A comprehensive list of creditors will need to be kept showing the names of each creditor, postal details, amounts owing, instalments required and references for each account. The debtor is now protected by a debt restructuring court order that allows them to pay one affordable installment per month for all of their debt. Statements can be requested by the debtor at any point to track their progress on paying off their debts. In our next video, we will break down how Administration and Debt Review works in terms of how often they pay your creditors, what protection each program offers as well as what commission and fees are charged in each.