Short answer:
When you’re under debt review, all your debts are consolidated into one affordable monthly payment. This payment is made to a registered Payment Distribution Agency (PDA), which then distributes the funds to your creditors according to your approved repayment plan.
Single Monthly Payment Through a PDA
Instead of paying multiple creditors individually, you make one monthly payment to a Payment Distribution Agency (PDA).
The PDA is an independent, regulated organisation that:
- Receives your monthly debt review payment
- Distributes the funds to each creditor
- Ensures payments are made according to your agreed repayment plan
This process simplifies your finances and helps ensure that all creditors are paid correctly.
Personalised Repayment Plan
Before payments begin, your debt counsellor will create a personalised repayment plan based on your financial situation.
They will review:
- Your income
- Essential monthly living expenses
- Your total outstanding debts
- The goal is to create a manageable repayment plan that allows you to repay your debts while still covering your essential living costs.
Reduced Instalments and Extended Repayment Period
Your proposed repayment plan is then submitted to your creditors for approval. In many cases, the plan may include:
- Reduced monthly instalments
- Extended repayment terms
- Possible adjustments to interest rates or fees
These changes help make your debt more manageable while ensuring creditors still receive repayment.
(You can learn more about how this works using this link: “How do debt counsellors negotiate reduced repayments?”)
Payment Distribution to Creditors
Once the repayment plan is approved, your monthly payment goes directly to the PDA, which distributes the funds to your creditors according to the agreed structure.
Your payment usually includes:
- Your debt repayment amount
- A small PDA administration fee for managing and distributing the payments
The Importance of Making Payments on Time
To remain protected under debt review, it’s essential that you make your monthly payment in full and on time.
Missing or delaying payments could lead to:
- Creditors resuming collection actions
- Possible termination of the debt review process
- Loss of legal protection under the repayment plan
Ready to simplify your debt into one affordable monthly payment? Speak to our team today to find out if debt review is the right solution for you.
