When starting with debt review, you might feel unsure about what your future holds. This is completely understandable. Big shifts are happening in your life, financially and emotionally. Debt review should not be feared, it is a process that will change your life for the better. Debt review (commonly called debt counselling) is a process that legally protects you and safeguards your assets.
In this Debt Rescue blog, we will take a closer look at what you can expect while you are under debt review, and what practical steps you can take to make this process stress free.
Debt Review Explained
Debt Review (debt counselling) was introduced in 2005 by the National Credit Act (NCA). The main purpose of the debt review process is to help over-indebted South Africans repay their debt in an affordable way. Once you are placed under debt review, your debt counsellor will negotiate with your creditors and your debt will be restructured.
What does this mean for you?
- Your monthly debt repayment amount is reduced to what you can afford.
- You make one consolidated payment per month to a Payment Distribution Agency (PDA).
- You are legally protected from asset repossession.
- Your living expenses are factored into your new repayment plan.
While debt review is incredibly effective, it will only work if you are fully committed.
Important Things to Do During Debt Review
1 – Stick to Your Budget
Your debt counsellor will work closely with you to set up a budget that ensures your essential needs, like groceries, transport, school fees are covered. The goal here is to make sure your budget is sustainable. It is crucial to follow your budget. We know it is hard but any small temptation today can unravel your progress tomorrow.
2 – Pay Your Monthly Repayment Amount in Full and on Time
Your reduced, consolidated repayment is the key to staying legally protected. If you skip a payment or pay late, you can jeopardise the entire debt review process and this could lead to your debt review being terminated. Which will give your creditors the green light to pursue legal action against you.
If you are going to miss a payment, contact your debt counsellor immediately.
3 – Keep the Lines of Communication Open
Please do not suffer in silence. Our debt counsellors are there for you, whether your circumstances change, positively or negatively. If you get a new job, or maybe face a financial emergency like job loss or illness, they will be able to assist you.
4 – Increase Your Payment (If Possible)
Every extra rand counts! Maybe you started a side hustle or your salary increased, let your debt counsellor know if you can contribute more towards your debt repayment. This can shorten your time under debt review and help you to become debt- free sooner.
Keeping Your Progress Safe: What to Be Cautious Of
1 – Avoid Taking out New Credit
During debt review, you are not allowed to take on new credit. This will include loans, store cards, overdrafts and buying on credit. Debt Review is designed to rehabilitate your finances, by giving you the ability to pay back what you owe.
2- Skipping Payments
Missed payments can unravel the protection that you have gained under debt review. If your debt review is terminated due to non-payment creditors can pursue legal action via a court judgement and they will be able to legally repossess your assets.
3 – Please Don’t Believe the Myths
- No, you won’t be blacklisted under debt review. Your credit report will reflect that you are currently under debt review, but this will be removed once you have fully repaid your debt and receive your clearance certificate.
- No, your employer and family will not know you under debt review. This process is confidential and private.
- Your credit score is not permanent. Once you have exited debt review, you will be able to apply for credit again and improve your credit score.
Let Debt Review Work for YOU!
Debt review takes commitment. It is a legal solution to give you the ability to plan better, sleep better and slowly regain control of your financial life.
These three golden rules can help you stay focused while under debt review:
- Stay on track
- Communicate
- Stick to your budget
Each payment that you make, is a step closer to becoming debt FREE!
If you are still unsure, or if you have any questions, Debt Rescue is here to help you. Our friendly professional team will walk with you every step of the way.
Contact us today for a free, no-obligation debt assessment.
Hi
1. What happens to the interest amounts calculated if a loan is being paid off less than was agreed
on
2. If after a year you retire and can pay off your loans what other hiccups can be expected. As in bank charges escalated, court orders etc.
3. i am thinking of the process when a loan is paid off you pay interest per month per amount. Hence if you pay less the interest is going to increase. Is this so??
Good day Jeremy, kindly reach out to us by completing a contact form and one of our friendly consultants will walk you through the answers to your questions.