If you’re in debt and need help, Debt Review might be the answer. Simply put: debt review is a process of allowing a debt counsellor to take control of your finances, who will then compile and consolidate your debt and create a comprehensive plan, aimed to ensure that you are able to repay all of your debt in an affordable manner whilst being protected.
What is debt review?
The Act used in the Debt Review Industry is Act 34 of 2005 under section 86 and it was implemented on the 1st of June 2007.
Debt review is a legal process and is also useful in that your overall debt repayments can be reduced and negotiated by your debt counsellor on your behalf. The advantage of debt review is the ability to protect you against asset repossession, legal action and creditor harassment.
What are the advantages of debt review? #
There are many advantages to going under debt review, and below we will just pinpoint a few you should know about off the bat!
1. One fixed monthly payment to be made
The more account payments you have due every month, the easier it is for you to accidentally miss a payment and make your situation worse. Missing a single payment can also affect your credit score and result in late payment fees, which are often expensive.
Another problem that arises when your household income isn’t high enough and you have overspent and over-committed to items that you cannot afford is that you are left with the dilemma of which creditor to pay at the end of the month. You will likely have great difficulty tracking all of your payments. And in bad scenarios, you may even take out more debt to make it through the month.
The advantage of going under debt review means that you no longer have to stress about your monthly debt repayments. A debt counsellor will simplify the process for you. And you will only have one fixed lower repayment per month to pay towards your debt.
2. Reduced monthly payments towards debt while under debt review
The main aim of debt counselling is to help you pay off your debt while still allowing you to have enough money to cover your other expenses throughout the month.
Therefore, your debt counsellor will negotiate and likely reduce your monthly debt repayment by extending your repayment period. By paying a decreased amount in repayments every month, you can afford to pay off your debt and cover all of your other living expenses whilst on the journey.
3. Legal protection, creditors cannot take action against you
The significant advantage of debt counselling, or being in the debt review process is that once you’re under debt review you will not have to worry about any legal letters or phone calls from creditors.
The National Credit Act legally protects you and your assets from creditors. This means that creditors may not hassle you during this time, and your debt counsellor will take over all communication with creditors on your behalf!
4. Take a break from credit while under debt review
Once you’re officially under debt review, your credit profile is flagged at the credit bureaus in South Africa, and they are aware of the actions you are taking to repay your debt. This means you cannot take out any further debt until the debt review process is complete. This is a great way to stay clear of incurring more debt and to start focusing on a debt-free future, even though can be worrying to some who feel they need a loan to survive the process.
The beauty of the debt counselling/debt review system is that once you have settled all your debts, you will receive an official clearance certificate, and the credit bureau will be notified to remove the flagged listing.
5. You will become debt-free if you fully complete the debt review process
There is a guarantee that if you commit to the debt review process and follow the stipulated plan you will settle your debt through the debt review process. If you are committed to working towards a debt-free future and you keep up with your monthly payments towards debt, you will gain financial freedom through debt counselling and it will be so rewarding and worthwhile!
To summarise, the benefits of Debt Review include:
- One affordable repayment plan
- No more multiple debit orders
- Lower interest rates negotiated by the Debt counselor
- All instalments reduced up to 50%
- Legal and asset protection
- Suitable household budget
