Have you ever been in a tight financial situation? Are you struggling to pay off your debt every month? If yes, you may have already stumbled upon something called ‘debt counselling’. This process is also referred to as debt review, which is a legal process regulated by the National Credit Regulator (NCR).
Wouldn’t it be great if we could win the lottery? All our money problems would be solved. But since the lottery isn’t a viable future financial plan, many of us need to find more effective ways of sorting our finances out.
The debt counselling process could be your saving grace when you’ve stretched your finances too thin. And when you’re unable to meet your monthly debt obligations. The process will help you manage your debt more effectively while teaching you how to be responsible with your money, during and after the process.
Unexpected expenses could leave you unable to pay your monthly debt repayments. Should this happen, it’s important to take action. Debt review has been an extraordinarily successful and affordable solution for thousands of South Africans suffering from over-indebtedness. The process ensures that all living expenses are covered and that the consumer can live without making any more debt.
Here are our top 7 frequently asked questions about debt review.
1. What is debt review?
Debt review is a formal debt rehabilitation program that seeks to help consumers who are genuinely struggling to generate enough income to make ends meet.
To do this, you’ll need a registered Debt Counsellor such as Debt Rescue who can negotiate with creditors on your behalf.
Debt review legislation is designed to protect consumers by ensuring they have affordable legal protection from credit providers in the case that a consumer ever becomes overburdened by debt.
2. Will I be blacklisted if I am under debt review?
While you are under Debt Review, your credit providers cannot “blacklist” you.
However, if the “blacklisting” takes place before you apply for debt review, it will reflect on your credit record. This is another reason why you should act earlier than later for debt review.
3. How does debt review affect my credit record?
While you are under Debt Review, a flag indicating that you are under Debt Review will be present behind your name at the Credit Bureau. Once you have satisfied your debt obligations, your debt counsellor will instruct the Credit Bureau to remove the flag and there will be no indication that you have ever been under Debt Review.
For purposes of obtaining credit in the future when you are back on your feet again, you should opt for Debt Review rather than juggling your Credit Providers by paying them less than your original instalment or not paying all of them timeously.
4. How long does debt review last?
As everyone’s debt review plan is different, it takes a different amount of time to complete.
Factors that affect how long debt review lasts include
- How much debt you have.
- How much you can afford to repay monthly.
Your debt counsellor will negotiate a repayment plan with your creditors that you can afford. The more you pay towards your debt every month, the faster you will become debt-free.
- Your commitment to becoming debt-free.
The more committed you are to keeping up with your monthly repayments, and paying more towards your debt when you can, the sooner you will be able to exit debt review.
5. What happens if I can’t pay my full debt review?
The debt review process is a lifeline. If you can’t honour your debt repayment plan, your credit providers will start taking legal action. This should be avoided at all costs.
Legal action can be taken against you if you fail to make your debt review payment every month, you should do anything in your power to honour your repayment plan so that you can avoid unnecessary stress and hardship for you and your family.
6. Can I get a loan while under a debt review?
I’m under debt review. I need money now. Can I get a loan? This is a question many South Africans ask when they’re under debt review.
For you to truly benefit from this process you’ll have to be okay with putting debt aside for a while. You won’t be able to pay off all your debt if you keep making more debt.
7. When can I take out credit again?
Once you have completed the debt review process and all your debt is paid off, you will receive a clearance certificate which is known as Form 19. Your debt counsellor will notify the credit bureaus that you no longer have any outstanding debt.
The credit bureaus are then legally required by the NCA to remove the ‘under debt review’ flag from your credit profile within 21 business days of being notified.
Once the ‘under debt review’ flag has been removed from your credit profile, you can take out credit again – responsibly of course.
Regulations around debt review can only protect you if you act…
If your creditors act before you do, it will be very difficult to get the financial relief you need.
If you’ve come this far in the post chances are you’re struggling to keep up with all your debt repayments, and you may have done research about the process. We have provided debt relief to more than 30 000 South African and are ranked as the #1 debt counsellor in SA.
If you’d like to get your finances back on track, leave your contact information below and one of our consultants will contact you shortly.