Debt Review in South Africa
Overview
Debt review is an alternative method of getting out of debt. It was introduced with the National Credit Act of 2007. Debt review was essentially introduced with the best interests of debtors in mind.
Tell me more about how debt review works?
If you are struggling to keep up with your monthly debt payments, you have the option of debt review. By applying for debt review your finances are able to be assessed thoroughly, in order to see whether you are over-indebted or not.
A debt counsellor from a debt company that is registered with the National Credit Regulator will decide whether you qualify for debt review or not. You will be required to provide your financial information and documents such as your I.D. and payslip. The application will usually take up to 5 days to complete.
To qualify for debt review, you must have some form of monthly income. This income should be able to cover your daily living expenses as well as your debt repayments.
Once you are approved, you will be placed under debt review. A debt counsellor will then intervene between you and your creditors. The counsellor will inform all your credit providers on your behalf that you have been placed under debt review. The counsellor will also negotiate on your behalf and prevent any legal action from taking place against you during this period. You creditors will not be permitted to contact you or demand payment from you for the next 60 days.
Your debt counsellor will work out a more manageable monthly payment plan and possibly a lower total amount owing as well.
What fees are involved in the Debt review process?
You will have to pay an application fee, a rejection fee if you are not over-indebted, a monthly fee and legal fees if you qualify.
What are the benefits?
- You have one monthly payment instead of paying multiple creditors.
- No more phone calls from creditors
- No blacklisting
You will be responsible for keeping up with monthly repayments. The debt counsellor will also teach you how to budget and manage your finances.
