Find out more about how debt administration works and why it was initially used. Have a one-on-one, free consultation with one of our debt counsellors about how we can rescind debt administration and why debt counselling is the best way to pay off or clear your debt.
What is Debt Administration?
Debt Administration is a debt solution that you may have taken in the past to appoint an administrator to collect from you an affordable amount of money at regular intervals. This is if your debts at the time were less than R50 000 and you were not able to pay off or service these debts. According to the Magistrate’s Court Act, the administrator can take a maximum fee of 12.5% of the amount that they distribute to your credit providers.
An administration order is granted in terms of section 74Q (1) of the Magistrates’ Court Act 32 of 1944. The process of administration orders was initiated as a means of debt relief solution for people who are overwhelmed by debt and whose debts were less than R50 000 and whose estate is so small that the costs of sequestration proceedings will swallow it. This is done in order to assist a debtor during financial difficulties without going through the route of sequestration.
What are the Disadvantages of Debt Administration?
- Debt administrators aren’t regulated and it becomes difficult to know whether or not they are genuine.
- In terms of the National Credit Act 34 of 2005, an administration order reflects on one’s credit report for a mandatory period of 10 years. This has a far-reaching crippling effect on one’s ability to borrow in the future.
Why Debt Review is the Better Option
At Debt Sage we offer debt review whereby we approach credit providers on your behalf to have them reduce the monthly instalments that you pay to a level that you can afford to pay. All household expenses are covered. Debt Sage debt counsellors are registered by the National Credit Regulator (NCR).
You may therefore want to speak to us about opting for debt review before considering debt administration.