Feeling crushed by your debt? Debt review can help you break the cycle and take control of your finances. Here’s what you need to know, and what you should expect from the process. Our counsellors make sure you don’t have to face this challenge alone.
What is debt review and how does it work?
First things first – let’s unpack what debt review actually is. Debt review in South Africa is a legal process regulated by the National Credit Act. It’s aimed at over-indebted consumers who need to regain their financial stability. Debt review counsellors must be registered with the National Credit Regulator and comply with the Act.
At Debt Rescue, we have over 15 years of experience in guiding clients to stability. We negotiate with creditors on your behalf and restructure your debt into an affordable monthly payment. During this process, we protect your assets and credit record so that you can rebuild.
The step-by-step debt review process
Here’s an overview of the full debt review process, explained and unpacked.
Step 1: Debt review application is made
If you decide to apply for debt review, you need to work with an NCR-registered debt counsellor to submit a formal application. You will need to submit all your financial details, including income, expenses and outstanding debts.
Step 2: Form 16 issued
You will sign a legal application for debt review known as Form 16, which begins the debt review process. This confirms that a formal assessment is underway.
Step 3: Assessment and Form 17.1 issued
Your debt counsellor will conduct a thorough affordability assessment. If you are found to be over-indebted – if your monthly expenses exceed your income – the counsellor will issue Form 17.1 to your credit providers. This is a formal notification that you are under debt review.
Step 4: Repayment proposal drafted
Repayment proposal draftedYour debt counsellor will then draft a revised repayment plan that is based on what you can reasonably afford once essential living costs have been taken into account.
Step 5: Court approval
The repayment process is submitted to the Magistrate’s Court for approval. Once the magistrate approves it, it becomes legally binding. This court order provides you with legal protection for the duration of your debt review process.
Step 6: Single monthly payment via a payment distribution agency
Instead of juggling creditors each month, you will make a single monthly payment via a payment distribution agency. This agency distributes payments to credit providers according to the court-approved plan.
Step 7: Completion and clearance certificate
Once all your debt has been fully repaid, your debt counsellor will issue a clearance certificate. They will notify credit bureaus and instruct them to update your credit records to reflect the successful completion of your debt review process.
Benefits of debt review
Debt review requires commitment, but it also carries several clear benefits.
- Firstly, you get legal protection from your creditors. Under the National Credit Act of 2007, creditors cannot take legal action, send notices or repossess assets while you’re under debt review.
- You also benefit from reduced payments. You’re able to cover your living expenses while steadily repaying debt via a single affordable payment every month. You know exactly how much to pay and how long it will take.
- You can maintain your assets throughout the process, including your home, car, and anything else that’s important to you – unlike liquidation or sequestration.
- Once you’ve completed the process, you will be able to rebuild your credit history with the credit bureaus. There’s no permanent black mark against your name.
- All of this gives you peace of mind. You can focus on earning a living and repaying your debt without having to dodge creditor calls, as you’re fully protected under the National Credit Act.
What to expect when you enter the debt review programme
Debt review is a highly regulated process. You will meet with an NCR-registered debt counsellor who can support you to get out of debt. They will ask you for a complete picture of your financial situation, including all income and expenses and the total debt owing, so that they can make the case that you are over-indebted and qualify for debt review.
You will be asked to sign a formal application, known as Form 16, to start the legal operation. Your debt counsellor will negotiate with your creditors on your behalf and will submit a plan to the Magistrate’s Court for approval.
Once this is in place, you will have a single affordable monthly repayment which you will need to meet until your debt is fully paid off. Often this takes between 3 to 5 years, depending on your personal circumstances.
How to apply for debt review
If you’re ready to take the next step towards financial stability, you can contact Debt Rescue for a no-obligation quote. Our counsellors are ready to assist you.