How debt review can change your life

What is debt review?

Debt review, also known as debt consolidation or debt counselling, is the process whereby a counsellor assesses a client’s outstanding debt and implements a structured repayment plan in accordance with the terms set out in the National Credit Act. The counsellor consults with credit providers on the client's behalf and assists the client in establishing an affordable monthly payment plan that incorporates both their earnings and living expenses.

The benefits are as follows:

• You can’t be taken to court. While you’re getting debt counselling and in the process of paying off your debts, legal action can’t be taken against you. It was put in place by the Nation Credit Act to protect South African citizens, not to punish them.
• You will receive professional financial planning assistance. Your debt counsellor will work alongside you to assess your monthly income and expenses and tailor a repayment plan that will allow you to maintain your standard of living while resolving your debt.
• The debt counsellor will negotiate with your creditors on your behalf. One of the worst parts of being in debt, is feeling ashamed to face your creditors. When you sign up for debt counselling, your counsellor will convene with your creditors on your behalf to tailor a repayment proposal.
• The law is on your side. Once creditors have signed a consent order (which is often linked to a reduction in fees and interest), they have effectively agreed to the terms of the restructured payment schedule and they cannot change it independently. If one of more of your credit providers are not happy with the terms, your counsellor will approach a magistrate on your behalf. If the repayment plan is reasonable, it should be approved by the court.
• You will only have to pay one monthly lump sum. Instead of making various small payments to a variety of creditors, you’ll only have to pay a single monthly lump sum to a payment distribution agency, who will be appointed by your debt counsellor on your behalf. The distribution agency will split it up and pay it to your creditors in accordance with the repayment plan that was agreed upon.
• Once everything is paid off, you’re free and clear! If you keep up with the monthly payments until your entire consolidated debt has been paid off, your debt review status will be removed from your name at the country’s credit bureaus.