What is Debt Review?
South African consumers were becoming over indebted and victims of reckless lending, to assist them to get out of debt the National Credit Act (NCA) introduced Debt Counselling otherwise known as Debt Review or Debt Management. This process is regulated by the National Credit Regulator (NCR) who ensures that all assistance offered by a Debt Counsellor is lawful and ethical and designed to offer consumer’s one monthly affordable instalment until their debt is paid up. Unlike administration Debt Counselling does not have long term effects and you are able to access credit again once your current debt is paid up.
Debt Counselling is a process that assists consumers whose expenses exceed their income. It is understood that these consumers cannot afford their full monthly instalments. Debt Counsellors are authorised to approach creditors on the consumer’s behalf to reduce their monthly instalment. Debt Counsellors have the ability to immediately stop legal action and reduce your repayment and interest rates by up to 60%. These are permanent arrangements until your debt is paid off as opposed to the temporary arrangements that credit providers will make directly with the consumer.
Debt Review is a process that brings your debt under control in one permanently reduced monthly instalment.
When one account is settled, that instalment is used to pay the remaining accounts. Once all your accounts are settled a clearance certificate is issued and there is no permanent record of being under Debt Review unlike Administration or sequestration. The process leaves no black mark against your name. You may now apply for further credit within your budget.
Debt Review gives you ONE PERMANTENTLY REDUCED MONTHLY INSTALMENT until your debt is paid up. There is no stress of dealing with individual creditors or legal action from them.
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Benefits of Debt Review
Debt Review is done by a debt counsellor. This is someone who is registered with the National Credit Regulator (NCR) and who assists consumers who are experiencing debt-related problems and are having difficulty making their current monthly payments by providing them with budget advice support and mediation with credit providers.
Debt Review is required by those who are over-indebted.
You know that you are over-indebted when you can no longer afford to make your full monthly instalments in time although you receive an income i.e. if you have received letters of demand, summons or phone calls for late or no payment from creditors.
One has to receive an income in order to go under debt review.
Once under debt review your credit providers may not take any further legal action against you and you are protected from being blacklisted
We negotiate with your credit providers for a lower affordable monthly instalment according to your current income
Going under debt review doesn’t mean that all your income is used to pay off bad debt.
Only a portion of your income after your essential living expenses have been taken out is used towards reducing your debt
With debt review you are no longer contacted by individual credit providers for their monthly instalments. Instead your residual income is paid to a legitimate and registered body the pda (payment distribution agency) who in turn pays all your creditors the instalment negotiated by us on your behalf
What this simply means is that:
We will negotiate a reduced instalment on your behalf for all the credit agreements held by you
Each month after your essential living expenses are taken out, the remainder of your income is paid over to the PDA who in turn pays your credit providers
This saves your assets from being repossessed although you are unable to make your full monthly instalment.