Common myths regarding Debt Review

Debt review is a legal process in South Africa which allows consumers to restructure their debt and become free of it. Despite its advantages, there are many myths surrounding the debt review procedure that prevent potential beneficiaries from taking advantage of this service. In order to understand how debt review works, it is important to recognize these common misconceptions.

One myth about debt review is that once an individual has entered into the process they will no longer be able to access credit. However, this is not true as creditors can still extend credit provided the debtor meets certain criteria set by the National Credit Act (NCA). Another misunderstanding regarding debt review concerns the notion that all debts must be paid off before any new loans can be taken out. This is false as payment plans for each creditor can be adjusted depending on changes in circumstances or income level.

Furthermore, another misconception about debt review is that it affects one’s ability to work with financial institutions such as banks. The truth of the matter however, is that while undergoing debt restructuring through a Debt Counsellor, individuals remain eligible for services like bank accounts and other banking products available at most commercial banks. Lastly, some people may think that entering into a debt review plan means you have to pay extra penalties or fees for entering into a repayment plan; however this again isn’t true since according to NCA guidelines Counsellors are prohibited from charging additional costs beyond those approved by the court [1].

All in all, understanding what debt review entails and being aware of these common misunderstandings helps consumers make informed decisions when considering whether or not they should enter into a legally binding agreement with their creditor(s). With accurate information comes greater clarity and potentially better outcomes when exploring alternatives to dealing with unmanageable indebtedness.

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