What does Debt Review mean?
Debt review, also known as debt counselling, is a debt relief measure created in terms of the National Credit Act (NCA) to assist consumers that are over-indebted. This is done through budget advice, restructuring of debts and negotiating with creditors. It is also a process created to protect consumers - specifically against credit providers.
How to know if you are over indebted?
A few signs that you might be over-indebted are:
- You struggle to keep to the terms agreed with your credit provider, specifically paying on time
- You borrow money to pay off other debts
- You have to skip payments on certain accounts to enable you to pay others
- Overdraft facilities and debt is used to buy food and necessities
- You have received letters of demand or summons from credit providers or their lawyers
- There has been a judgement granted against you
Can you apply for Debt Review?
If some of these points sound familiar to you and hits close to home, you could qualify for debt review in South Africa. It is important to note that to qualify, you have to have a distributable income [regular income], as this will be used to offer reduced payments to your credit providers and create a payment plan. Also to note is if you are married in community of property, you and your spouse must jointly apply for debt review.
Should you apply for Debt Review?
The debt review process was introduced in 2007 with the National Credit Act (NCA). It has advantage for people because while they’re getting debt counselling and paying off their debt, legal action can’t be taken. But, keep in mind there is also a rejection fee of R300 plus VAT should the debt counsellor decide that you are actually able to manage your debt yourself. So, to apply you must truly be battling to pay off your debt.
Here are a couple of companies compared on Fincheck for you to apply to:
In our next post, we’ll go through the process of applying for Debt Review and also talk about some of the costs involved! Sign-up below to stay tuned: