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Debt Review

Debt consolidation loan is one of South Africa's most requested debt solutions to provide debt relief

The Debt Review process is a legal process created within the National Credit Act as a means of debt rescue for consumers with over-indebtedness. Debt Review is conducted by a debt counsellor. There are various debt counselling companies in South Africa such as Debt Rescue, DebtBusters, Debt Wise and many other NCR-approved debt counselling companies.

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Brief Overview

Are you battling to pay your debts? Do you struggle with many debt repayments and wish someone could give you a debt consolidation loan so that you can pay them one single, convenient amount? Has your debt consolidation loan been rejected? It may be that you are over-indebted and need to apply for debt review.

What is being over-indebted?

Often people rack up debt unintentionally, and their living expenses further exacerbate the problem. Once your monthly budget gets to a point where you are unable to cover your living expenses without defaulting on your debt repayments, you can consider yourself over-indebted. At this point, you need debt help and a debt consolidation loan will not help you.

Over-Indebted Consumers in South Africa

  • Gauteng

  • Western Cape

  • KwaZulu Natal

  • Eastern Cape

  • North West

  • Free State

  • Limpopo

  • Mpumalanga

  • Northern Cape

What is Debt Review?

The Debt Review process is a legal process created by the National Credit Act as a means of debt rescue for consumers with oover-indebtedness Debt help in South Africa is limited to a few options like debt consolidation loans, debt administration, informal debt management arrangements with your creditors, the most effective one, debt review and the last means of debt rescue, which is sequestration.

  • Period

As you can see, after all the loans and their respective instalments have been accumulated, the total amounts are quite substantial, and in most cases unaffordable!

The role of a debt counsellor

Debt Review is conducted by a debt counsellor. There are various debt counselling companies in South Africa such as Debt Rescue, DebtBusters, Debt Wise and many other NCR-approved debt counselling companies. The counsellor’s responsibility is to conduct a financial assessment to conclude whether a consumer is over-indebted or not, ensure a proper negotiation is made to reduce the instalments and interest rates of the consumer, and to facilitate the process of debt review until the consumer is debt free.

On a broader scope, it is also the function of a debt counsellor to teach the consumer to be more debt wise and ensure they never get into such a situation again.

Steps of Debt Review

  1. A consumer realises that they are over-indebted and contacts a registered debt review company.
  2. A debt counsellor conducts a financial assessment with a consumer to conclude whether the consumer is over-indebted or not.
  3. If the counsellor concludes that the consumer is over-indebted, the consumer is accepted under the debt review process, or if the conclusion is that the consumer is not over-indebted, they are rejected. This is all in accordance to the National Credit Act Section 86.
  4. The consumer will then hand over important personal information such as ID copies, payslips, bank statements and all requested documentation to the debt counsellor and work with them to create a new budget for them to live according to, going forward.
  5. The debt counsellor will then begin communication with the consumer’s creditors and begin sending proposals to the creditors with regards to the new instalments and interest rates the consumer is to pay. Also, investigation of any cases of reckless credit that may need pursuing on behalf of the consumer is conducted.
  6. The consumer will have to start making payments through the Payment Distribution Agency working with the debt counsellor. Initially, these payments will go towards the fees of the debt counsellor such a restructure fees, application fees and legal fees.
  7. Within a period two to three months the payments will start going towards the consumer’s debt repayments. This allows for the recoup of fees by the debt counsellor and also for proper negotiation with the consumer’s credit orders.
  8. The debt counsellor will obtain a court order or consent order via a magistrate’s court or the National Consumer Tribunal to ensure the new debt repayment is legally enforced.
  9. Once the debt has been repaid, the consumer will receive a clearance certificate. At this stage there will be no sign of the consumer ever have been under debt counselling. The consumer can then enter into credit agreements as per normal.
  10. The whole process is designed to be completed in a maximum of 60 months (can be a lot less).
  11. There is no minimum time before you can exit debt counselling if you make additional payments or make lump sum payments, once you make your last payment you can exit the process, it can take 60 months or as little as 6 months, this is up to you.

Debt Review Statistics

25%

Year-on-year increase in debt review applications

85%

Acceptance rate of our proposals to credit providers

93,8%

Over-indebted credit active users who need debt review

29%

Of all Credit accounts are impaired

The process of debt review is medium to long term commitment for a consumer unlike a debt consolidation loan, but it is also a good debt management option for those who have not been too debt wise and are over-indebted.

The benefits of debt review:

  • Consumers are able to pay a significantly reduced instalment for all their debts. This can be as much as 65% of their original instalments.
  • Interest rates are reduced for all debts. Consumers will save on interest over the period of the debt review process.
  • Assets of the consumer are safe from any legal action from the credit provider.
  • A consumer is given the opportunity to learn more about budgeting and live on their income instead of debt.
  • The consumer will be debt-free after the process.
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