Debt Review – A Detailed Description
Almost everyone has debt these days. With the price of petrol, cars, houses, consumables, and your monthly municipal bill, it’s almost impossible to pay cash for everything. Yes, and unfortunately we tend to overspend and live above our means. It’s natural to want to spend the money you earn. Thing is, we make unwise purchases and don’t think before we ink!! With the result, we end up with debt that we can’t handle.
This is why it could be necessary to apply for debt review, even if you think you don’t need it. It’s worth it in the long run. Let me explain…
What is debt review exactly and how does it work?
You will apply for debt review with the help of a registered debt counsellor or consultant. He will need to look at all your financial information, including your income, expenses, assets and liabilities, and check to see whether you are over indebted. The debt review process can take up to 60 working days. Once all the info is consolidated, the debt counsellor can then determine if you are over indebted.
Unfortunately, you have to be over indebted to go under debt review. If you do not qualify for debt review, the debt counsellor can still assist you with a payment plan.
Where and how do I start?
You will need to start somewhere, and that could mean making some painful lifestyle changes, such as starting to work through a comprehensive budget to cut back on your expenses. It could mean finding another home for expensive pets, or getting rid of your DSTV and any extravagant nights out. Ouch!! You might even need to sell your dream house, or your second car or motorbike that you can really do without. It all depends on your circumstances, but with perseverance you can pay off your debts and become debt free again! The choice is yours – take the plunge and check out debt review!
What does the debt counsellor do?
If you do qualify for debt counselling, the debt counsellor will prepare a debt restructuring proposal to your creditors. The biggest benefit however, is in not having to pay the full instalment due to your creditors. A reduced payment arrangement is put in place allowing you to pay your creditors less on a monthly basis. This makes paying your debt more affordable so you can get on with your life.
The result of debt counselling
Once everything is in place and the ball is rolling, you will feel like a mountain has lifted off your shoulders. It feels good to not have to stress about how you will you’re your creditors at the end of every month, not to mention receiving threatening telephone calls and final demands. Great thing when being under debt review, is your creditors cannot take any legal action against you or repossess any of your assets. Bargain!!
The downside of being under debt review
The draw back of debt counselling (and yes, there is always a downside), is that it will take you longer to get debt free, with the result, it is more expensive. Another reason is you will not be allowed to get anymore credit while under debt review. That means you will have to cut up your credit cards – yes, not so nice is it, especially since it’s been your buddy for years!!
What are the fees for debt counselling?
The allowable fee is R3000 plus VAT, or R4000 plus VAT for couples. These fees are set by the NCR (National Credit Regulator), and are deducted from your monthly fees to your creditors, so you won’t have to pay everything up front. That’s good! There are additional after-care fees, as with all debt counsellors, but this will be explained to you by your debt counsellor. These after-care fees are limited to R300 maximum per client and are also deducted from your monthly contribution. It is a small fee, so don’t fear!!
Now that we have that behind us, lets look at how you can find a suitable debt counsellor that you can trust and that is registered to act legally.
How do I know which debt counsellor to go with?
The profession of debt counselling is very new. As a result the quality of debt counsellors vary. It is therefore very important to choose your debt counsellor carefully. Here are some criteria that you need to look out for:
- The debt counsellor must be accredited by the National Credit Regulator (NCR)
- It is advisable that they use debt counselling software approved by the NCR
- They must be compliant with the NCA and the NCR’s Guidelines to Fee Structure
- To have accepted the Consumer Assist Professional Code of Conduct
- They must use of the National Payment Distribution Agency to manage your repayments to creditors
- They should comply with additional company certification that requires training at regular intervals
That’s enough of that. Now, are you blacklisted? If so, we have some tips to help you improve you credit score? You can also find out what your credit rating is.
Your credit rating
You are able to obtain a free credit report online, but it only provides information from ONE of the credit bureaus in South Africa. This is due to the business subscriber having listed you with only ONE of these credit bureaus. To be on the safe side, you should get your credit record from both credit bureaus, either by applying directly to each one, or by getting a consolidated credit record.
Take Note: Once you have been under debt review and paid off your debts, your name is automatically removed from the credit bureaus, so you will have a clean credit record!!!
Some helpful tips and advice
If you find out you are blacklisted, as a result from being over indebted, its time to seek a debt counsellor, and go under debt review. If you are blacklisted, but you can afford to pay off your monthly accounts, do so as soon as possible, and ON TIME.
This is important, because each month your payments get recorded in the Payment Profile section of your credit record, and provided you have been paying your accounts on time for at least six months, or preferably a year, you stand a far better chance of being granted credit. If you can’t pay the full amount, at least pay something, and keep in contact with your creditors.
If you have judgments against your name, it is critical to have them removed as soon as possible. We can help you with that too! We have respected attorneys that will give you excellent professional advice as to how to conduct your finances, and assist you with clearing your name after your accounts have been paid in full. It’s worth the effort believe me, and worth every extra cent paid to sort out your credit record.
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