The prospect of debt review can feel very intimidating. It’s not an easy decision to make, especially if you’ve always been responsible for providing for your family. It takes guts to ask for help – and it’s often the first step to getting back on solid footing after a shaky financial period. When you’re with the right debt counsellor, you should feel supported all the way through.
If you’re thinking about reaching out, here’s what you can expect when you start the debt review process.
What happens after the initial debt review enquiry
Once you send an enquiry, a consultant will contact you to understand your financial circumstances. We need to understand what is causing the financial pressure. Is it that there is not enough money to get through the month? Is there legal action on a vehicle? What exactly is happening?
We will ask for your ID number and consent to pull a credit report. This gives us an overview of your debt, your creditors and whether you are behind on repayments. If you are married in community of property, we need the details of both spouses because you are treated as one financial entity.
The debt counsellor then assesses the information to determine whether you are over-indebted. Only a registered debt counsellor can make that determination.
You can also complete an online application form, providing your income, expenses and contact details. However, many consultants prefer to have a telephone conversation because it gives a clearer understanding of your situation and ensures you fully understand what you are applying for.
Who qualifies for debt review
Debt review isn’t for everyone, unfortunately. You’ll need to be a South African citizen and to be able to show proof of income – whether that’s a regular monthly salary payment, commission from sales, or self-employment.
The clearest sign that debt review may be appropriate is when your living expenses and debt repayments exceed your income – or when you’re falling further behind each month and have no realistic way of catching up.
Understanding more about debt review
If you’re considering debt review, you probably have lots of questions. Here are some of the most common questions we’re asked.
How long does debt review take?
People often ask how long the debt review process takes. There is no single answer because it depends on factors such as the repayment amount, the total outstanding debt and the interest rates involved. While many debt review plans are structured around a five-year period, the actual term can vary.
When do my creditors start receiving payments?
Once you’re in the debt review process, and paying your monthly fees, you might think your creditors are receiving payment immediately. In reality, the first month of the process covers restructuring, administration and legal fees in line with industry guidelines. Your creditors will only receive distributions after this period. However, they understand how the process works and we negotiate with them on your behalf.
Can I continue to use credit while under debt review?
No, if your debt review application is successful, you won’t be able to continue using your existing credit facilities (credit card, overdraft, etc) or take on new credit while you’re under debt review. Your credit facilities will be frozen for the duration of your process.
Once the process has been completed and a clearance certificate has been issued, the debt review flag is removed from your record. At that point you can apply for credit again.
Can I cancel once I’m in the debt review process?
Say you’ve started your debt review process and you’ve managed to secure a new job or a promotion. You now have more money coming in and you’re looking forward to having your old lifestyle back. Can you get out of debt review before your term is up?
Well, yes. You can withdraw the mandate for your debt counsellor, but there are risks. Your creditors may revert to your original contractual terms and repayment amounts, which may not be affordable. If your financial position has improved, you should either follow the proper legal process to be declared no longer over-indebted, or remain in debt review while making additional payments to settle the debt faster.
What can I do to help improve my situation?
Make additional payments whenever possible. Even a small extra payment – R200 a month – put towards the account with the lowest balance will reduce your overall repayment term significantly.
When to reach out for debt review
If you’re in over your head, it’s often better to reach out earlier. You can take action now and stop worrying about the next payday – or wait a few more months and fall even further behind.
Debt review can improve cash flow, reduce stress and provide peace of mind. Most importantly, it creates a plan to deal with debt while allowing you to focus on supporting yourself and your family. With Debt Rescue, you’re in safe hands with NCR-registered counsellors and over 15 years’ experience helping people get back on solid ground. Contact us today for an obligation free quote.
Ask for help when you need it
Managing financial uncertainty and dodging debt collection calls is enormously stressful. If you’re feeling overwhelmed and unable to meet your obligations, it may be time to consider debt review. This will give you legal protection while helping you negotiate more affordable payment plans.
Debt Rescue has over 15 years of experience in helping South Africans to manage their debt. Our debt counsellors are registered with the National Credit Regulator and can guide you towards long-term financial stability with affordable repayment plans and legal protection. Contact us today for an obligation free quote.