What Is Debt Review and 5 crazy reasons Why?

So what is debt review? Debt review was introduced in 2007 by the National Credit Act, is a debt relief measure in South Africa that helps over-indebted consumers avoid blacklisting and the consequences of over indebtedness. Here’s a deeper look into what debt review is, the legalities involved, and how companies like Debt Guides can assist you:

What is Debt Review?

Debt review is also called debt counselling, is a formal process where a registered debt counsellor assesses your financial situation. They’ll look at your income, expenses, and outstanding debts. The goal is to create a restructured payment plan that’s affordable for you and agreeable to your credit providers.

Undergoing Debt Review

  1. Assessment: You’ll consult with a debt counsellor (like those at Debt Guides) to evaluate if debt review is the best solution. They’ll determine if you are over-indebted, meaning you are unable to keep up with your current debt obligations.
  2. Application: If eligible, the debt counsellor will guide you through the application process, which includes providing essential financial documents.
  3. Notification: The counsellor notifies your credit providers and credit bureaus of your debt review application. This offers immediate protection from legal action while negotiations take place.
  4. Negotiation: The debt counsellor restructures your debts by negotiating with your credit providers for reduced monthly instalments and interest rates.
  5. Court Order (if necessary): A court order may be required to formalize the new agreement if negotiations are unsuccessful.
  6. Single Monthly Payment: Once the plan is approved, you make a single, consolidated monthly payment to a Payment Distribution Agency (PDA), who then distributes the funds to your creditors.

Legalities of Debt Review

  • National Credit Act (NCA): Debt review is governed by the National Credit Act. This law provides guidelines for debt counselors, protects consumers’ rights, and sets out the process.
  • Debt Counsellors: Debt counsellors must be registered with the National Credit Regulator (NCR) to provide debt review services. Companies like Debt Guides ensure their counsellors are qualified and compliant.
  • Reckless Lending: The NCA aims to prevent reckless lending by credit providers, a common factor that contributes to people becoming over-indebted.

Benefits of Debt Review with Debt Guides

  • Protection from Creditors: Legal action, vehicle repossessions, and constant harassment from creditors are temporarily halted.
  • Reduced Payments: Negotiated payment plans make your monthly instalments more manageable.
  • Lower Interest Rates: Reduced interest rates save you money in the long run.
  • Avoid Blacklisting: Debt review helps you avoid a negative credit record if you honour the restructured repayment plan.
  • Professional Support: Debt Guides’ experienced debt counsellors provide ongoing guidance and support throughout the process.

Important Considerations

  • Not a Quick Fix: Debt review is a journey, not an overnight solution. It requires dedication and discipline with the restructured payment plan.
  • Cost: Debt counsellors charge fees for their services. Debt Guides will be upfront about their fee structure.
  • Continued Responsibility: You must still honour the restructured payment plan to successfully exit debt review.

If you’re struggling with debt, contact Debt Guides. We are dedicated professionals who can assess your situation and determine if debt review is the right solution for your financial freedom.

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