Some South Africans have misconceptions about debt review, or debt counselling, thinking that the process will send them in the opposite direction of financial recovery. It is our responsibility as a debt counsellor to provide you with as much information about debt review as possible.
Myth 1: Debt review is a last resort
Busted: Debt review is a debt rehabilitation programme that helps over-indebted consumers become debt-free. The process was established in 2007 to help over-indebted South Africans cope financially.
The process is ideal for consumers who have an income and are struggling to afford their monthly debt repayments. The consequences of living in debt can cause severe financial and emotional consequences. The NCA introduced the debt review process to help struggling consumers from becoming blacklisted and to legally protect you from losing important assets such as your home or car, which would essentially leave you in a worse position than before.
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.
Myth 2: You will be blacklisted if you’re under review.
Busted: This is a false misconception and consumers have built up over the years.
Debt review was established in 2007 by the National Credit Act (NCA) to help over-indebted consumers become debt-free. The process was put in place to prevent consumers from being blacklisted. In fact, blacklisting doesn’t exist anymore. The term has stuck around to describe someone who has an “impaired” credit record. Which means you’ve defaulted on multiple repayments.
Once you’re under debt review you will be prevented from making more debt. That does not mean you are blacklisted, but you have to avoid debt while you’re under debt review. Learning how to live without credit will put you in a better position once you’ve exited the process and received your clearance certificate.This may seem scary at first. But after suffering from being over-indebted, learning to live without debt becomes a valuable tool when it comes to being financially free.
Myth 3: Debt review does not work
Busted: 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.
Debt review helps over-indebted consumers by extending the repayment terms and lowering monthly repayments. Your debt counsellor will consolidate and lower your monthly debt repayments so that you have more money available for other monthly expenses. Debt review has helped thousands of consumers over the years.
Myth 4: Debt review takes 5 years or more
Busted: This is one of the biggest myths in the industry. The debt review process will take as long as you want it to take. Your debt counsellor will assess your affordability and determine the best repayment plan for your financial situation.
However, you could speed up the process by increasing your affordability amount. You can do that by lowering your other monthly expenses like rent/mortgage, travel costs, groceries etc. Once you’ve lowered your monthly expenses you’ll have more money to pay off your debt.
That means you could settle all your debt within 12, 24, 36, 48, 60, or 72 months.
Myth 5: Debt counsellors don’t pay creditors
Busted: Debt counsellors don’t have access to clients funds. All payments are made through a payment distributor as per the National Credit Regulators’ terms and conditions. The payment regulator manages the client’s payments on their behalf and distributes funds to all creditors as allocated by the court agreement.
If you are over-indebted and struggling to pay all your monthly expenses, debt review may be the perfect solution for you. Leave your contact details below and one of our friendly consultants will get back to you as soon as possible.