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Expressions Explained to Check Debt:
When you speak to a debt counselor, they can say that they can give you a “Form 16“. What is this strange shape and why is it important?
The National Credit Act (NCA) contains a number of official forms and documents that are used to provide credit and help people review debts. One of those shapes is called Form 16 (you guessed it, the forms are numbered and this happens to be the 16th).
‘Form 16 is an application form. The form helps consumers apply for a debt assessment counselor. ‘
Form 16 is an application form. The form helps consumers apply for a debt review with a debt counselor. This is the first official step in a process that seeks to seek help with debt problems with the help of a debt counselor and the courts.
What’s in a form 16?
Form 16 requests information about:
Your household income
Your monthly commitments
The form also includes some very general debt verification information.
Most consumers are familiar with much of this information and should be able to provide most of it, possibly with a little bit of verification. Some information may not be known to you and the debt counselor can find it out for you later.
Debt counselors, lenders, and the courts have found that consumers often lack all of the information or have guessed some numbers incorrectly. This is then addressed when the debt counselor takes over the formal task Debt Review. At this point, the debt counselor will determine if the consumer (1) needs and (2) qualifies for debt counseling.
By completing the form and signing the application, the legal process of debt review under the National Credit Act begins. The debt counselor then has certain time frames to adhere to in order to provide assistance to the consumer.
Did you know:
A Form 16 is not a contract
It is important for consumers (and debt counselors) to realize that a Form 16 is an application document, not a contract. Just because you fill out the form doesn’t mean you will qualify for the debt check. Although many debt counselors add information to their interest rates or include documents called a Power of Attorney (POA), that extra information doesn’t miraculously turn the application document into a contract.
“It is important for consumers to realize that a Form 16 is an application document, not a contract.”
According to the Consumer Protection Act, a contract should specify which services the debt counselor provides will and habit do for you.
It should also set out the cost of their services. This is important because there are (currently) no regulated debt review costs. Each debt counselor can set their own interest rates. There are some industry standards and suggestions from associations and the National Credit Regulator, but they are not binding. Therefore, your contract should define these costs for you (including information on the legal side of the process).
If you are just starting out with debt verification, ask your debt advisor for a contract once you have completed, signed, and submitted your application Form 16.
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