Introduction
Dealing with overwhelming debt can be a stressful and challenging experience. If you’re struggling to make your debt payments, you may be considering debt review as a solution. This process can help you regain control of your finances and eventually become debt-free. In this blog, we will take you through the debt review process step by step, so you know what to expect and how to navigate this financial journey.
Chapter 1: Understanding Debt Review
Debt review, also known as debt counseling, is a legal and regulated process governed by the National Credit Act in South Africa. It is designed to assist individuals who are over-indebted, helping them restructure their debts and establish a manageable repayment plan. During this process, a debt counselor will act as a mediator between you and your creditors, facilitating negotiations to find a feasible repayment plan.
Chapter 2: Assessing Your Eligibility
Before you begin the debt review process, you must determine whether you meet the eligibility criteria. To qualify for debt review, you should be over-indebted, meaning that your monthly debt repayments exceed your monthly income after covering essential living expenses. If you meet this criterion, you can proceed to the next step. A qualified and registered debt counsellor will assist you with this determination.
Chapter 3: Choosing a Debt Counselor
Selecting the right debt counselor is a critical step in the process. Ensure that the debt counselor you choose is registered with the National Credit Regulator (NCR) and holds the necessary accreditations. Be sure to discuss their fee structure to understand the costs associated with the service. These fees are determined by the NCR and can be obtained on their website.
Chapter 4: The Application Process
Once you’ve chosen a debt counselor, you will need to complete an application for debt review. This typically involves filling out Form 16, providing your credit reports, and undergoing a comprehensive debt assessment. Your counselor will then notify your creditors that you are under debt review, which will temporarily protect you from legal action.
Chapter 5: Negotiating with Creditors
Your debt counselor will work on your behalf to negotiate with your creditors. They will propose a new repayment plan, which may include reduced interest rates and extended terms. If your creditors agree to the proposed plan, a consent order is obtained from the court, formalizing the new repayment terms.
Chapter 6: Monthly Payments and Debt Clearance
During the debt review process, you will make a single monthly payment to a Payment Distribution Agency (PDA), who will distribute funds to your creditors. As you make consistent payments and adhere to the repayment plan, your debts will gradually be paid off. Upon successful completion of the plan, you will receive a debt clearance certificate, confirming your financial rehabilitation.
Chapter 7: Conclusion and Future Financial Freedom
In conclusion, the debt review process is a valuable tool for individuals struggling with debt. It provides a structured approach to managing and reducing your debt, paving the way for future financial freedom. It’s essential to maintain responsible financial habits, including budgeting and improving your creditworthiness, to ensure a debt-free future.
By following these steps and working with a qualified debt counselor, you can regain control of your finances and work towards a debt-free future. Don’t let debt overwhelm you – take the first step toward financial recovery with debt review.
Conclusion
Debt counselling is not a death-sentence, but rather a lifeline to protecting you, your family and your assets when the debt burden has become too much. Now knowing what to expect during the debt review process, please consider contacting us if you feel you could benefit from making use of our services as registered debt counsellors.