Signed contract with your debt counsellor?

When beginning the debt review process many consumers will be asked to fill in a standard form called a Form 16. This form helps set out the consumers income vs expenses as well as debt obligations to the best of their knowledge at the time.

Often times consumers and Debt Counsellors mistake this form for a contract between the two parties since most Debt Counsellors have included sections to this form which set out the costs and possibly a limited power of attorney.

A Form 16 is not a service level contract however.

Under the Consumer Protection Act a contract to provide a service should set out clearly the services that will (and will not be offered)

If you are a Debt Counsellor you should prepare such a document for each consumer and have them go through each section and clearly indicate that they understand. Keep the Jargon to an absolute minimum and clearly state what services you will offer. Make clear to the consumer that their debt remains their debt and the obligation to pay their debt and normal monthly running costs lies firmly with them.

Also state that Debt Counsellors do not have authority to restructure debt – only courts do.

clearly worded contract can help avoid any confusion on the part of a consumer.

Take the first step towards financial clarity and peace of mind with Zero Debt. Whether you’re just starting the debt review process or need guidance on your existing debt obligations, our certified Debt Counsellors are here to help. Call us directly at 087 702 1738 or visit our contact page to connect with our supportive team. If you’re pressed for time, simply request a Free Call Back, and one of our experienced counsellors will reach out to you. At Zero Debt, we provide clear, straightforward advice to ensure you fully understand your debt obligations and the services we offer. Contact us today and start your journey to financial freedom.

FAQs & Answers

1. What is Form 16 in debt counselling?
   Form 16 is a standard form used at the beginning of the debt review process to outline a consumer’s income, expenses, and debt obligations.

2. Is Form 16 a contract between the consumer and the debt counsellor?
   No, Form 16 is not a service level contract. While it includes financial details and sometimes costs, it does not replace a formal service agreement.

3. Should a debt counsellor provide a separate service agreement?
   Yes, under the Consumer Protection Act, a debt counsellor should provide a clear, jargon-free service level contract outlining the services offered.

4. What should a debt review contract include?
   A debt review contract should clearly explain which services will and will not be provided, the consumer’s obligations, and legal disclaimers.

5. Can a debt counsellor restructure your debt directly?
   No, only a court has the authority to restructure debt. A debt counsellor can prepare and propose a plan but cannot enforce changes independently.

6. Why is it important to understand your debt obligations?
   Understanding your debt responsibilities ensures that you stay in control of your finances and are aware of what your counsellor can and cannot do.

7. What are the risks of not signing a proper contract with a debt counsellor?
   Without a clearly worded contract, misunderstandings may arise regarding services provided, costs, and responsibilities during the debt review process.

8. How can Zero Debt help with debt contracts and reviews?
   Zero Debt offers clear, supportive advice and contracts, helping you understand your debt obligations and start your journey toward financial clarity.