In the case where the consumer

In the case where the consumer has a luxury home or vehicle, Debt Counsellors should investigate the possibility to sell these assets and to downgrade. This is not always possible for the following reasons:

a) If a house is sold the proposed rental could be more that the proposed repayment of the house.

b) If a house is sold well below the outstanding balance, the consumer still has to repay this shortfall. This might place the consumer in a worse position.

c) Consumers under debt review are not accepted by rental agents due to their listing on the Credit Bureau and the fact that they are under debt review.

d) If a vehicle is sold the consumer will not be able to access credit to purchase a smaller vehicle unless a Credit Provider is willing to provide a Consolidation Loan to finance a vehicle.

e) If a vehicle is sold well below the outstanding balance, the consumer still has to repay this shortfall. This might place the consumer in a worse position.

f) Credit Providers are of the view that new loans to finance for example a more affordable house or replacement of a vehicle (to scale down or in case of a loss through theft or accident) fall outside the definition of Consolidation Loans in terms of Section 88(1) and could be classified as reckless lending and accordingly are unwilling to provide such loans It is recommended that the Debt Counsellors confirm to Credit Providers in the repayment proposals that he or she has explored the possibility of selling assets to reduce debt and where if not, why this has not happened. It is also recommended that the Debt Counsellor include a confirmation in the affidavit submitted to Court that he or she has assessed the list of assets provided by the consumer and that unencumbered assets that could be sold have been, alternatively an explanation why they have not.