Payment Distribution Agencies (PDAs)

A concern which some clients have raised is : Will my accounts be properly paid up and settled via Debt Review? And why should I make my payments through a PDA (Payment Distribution Agency)?
To a large extent, these questions have been addressed in the February 2016 edition of DebtFree Digi magazine (available to read on our website – great issue, thanks Zak & team), but we’d like to add the additional weight of some of our experiences to answer these concerns.

It’s unrealistic to expect that there won’t be any discrepancies between the records of the Debt Counsellor & PDA and those of the creditors. One day’s difference between the PDA making a payment and the creditor receipting that payment will result in a small difference in the interest calculation. However, these discrepancies usually aren’t substantial, and can be resolved relatively simply. For the Debt Counsellor, though, it emphasises the importance of reconciling accounts with creditors, to ensure that balances are synchronised. The PDA’s Payment Tracking facilitates this significantly.

We’ve also found the PDA to be a valuable resource for record-keeping. We recently had a case where a client’s Credit Card account with one of the major banks was Paid-Up, according to our records. However, when we requested confirmation of this from the bank, they claimed that there was still an outstanding balance in excess of R3 000.00. When we requested, received and reconciled (using the PDA payment history) the statement of this account, it was revealed that the bank had added significant amounts of fees and annual charges while the account had been under Debt Review. To their credit, though, when we pointed out to the bank that these additional amounts had neither been disclosed on the Certificate of Balance which they’d provided when the client applied for Debt Review, nor had they been made provision for in the Debt Restructuring Court Order, the bank reversed all of these fees and issued the requested “Paid-up” letter.

We have also encountered situations where an account has been settled via Debt Review, but creditors subsequently contact the client, claiming that there’s an outstanding balance. In all such cases, though, we’ve simply forwarded them THEIR Paid-Up letter, and those claims of an oustanding balance have been silenced.

Finally, it is definitely NOT recommended that Debt Review clients make payments directly to their Debt Counsellor (or any staff or agents of the Debt Counsellor) for them to distribute to creditors.

These are compelling reasons for Debt Review clients to make their payments via a PDA (even though they have the right to pay their Restructured instalments directly to their creditors). In our experience, the PDA is a valuable mechanism for keeping records, tracking and verifying payments, resolving queries and ultimately ensuring that clients’ accounts are properly settled, while relieving both clients and debt counsellors of a significant administrative burden.