Taking the brave step to get debt help can be daunting. It’s bad enough that debt itself cripples and causes a stress and anxiety overload, but to then seek help with solving the issue outside of yourself is another issue altogether.
However, it’s the right thing to do. If you need help clearing your debt, read on.
Debt Review Explained
Debt review is a formal debt restructuring process for South Africans struggling to make ends meet at the end of each month. It was created under the National Credit Act 34 of 2005 (‘NCA’) and is the government’s answer to the rising problem of consumer debt and the chronic over-indebtedness that plagues many South Africans.
Debt review in South Africa was built with you, the consumer, in mind, and is highly regulated and can only be conducted by an NCR qualified Debt Counsellor. The process allows a debt counsellor to renegotiate and restructure your debt to an amount that you can afford each month.
Your only requirement during the debt review process is to continue to pay your reduced monthly instalments, and once your plan is complete and your debt is paid off, your credit record is cleared, and you can start living debt-free.
What Does it Mean to Be Under Debt Review?
Being under debt review is the first step to your financial freedom, and it means that you have appointed a debt counsellor who has worked through your income and expenses and has determined that you are over-indebted and unable to make your month-end payments.
As mentioned, this entire process is regulated by the NCR under the National Credit Act.
How Long Does the Process Last?
The debt review period varies according to how quickly you can pay off all your debts. The process can last for just a few months, or up to 60 months. Alternatively, if you’re no longer over-indebted and can resume normal repayments and do not have a formal court order granted, we can begin the debt review removal process for you by applying for an order to rescind your debt review status.
It’s important to note that debt counselling is not the same as blacklisting. Any record of you being under debt review is removed from your credit record once you’ve completed the process successfully.
What are the Costs Involved?
The National Credit Regulator (NCR) issues fee guidelines for debt counsellors that include an application and administration fee of R350 plus VAT, a restructuring fee equal to the first month’s instalment up to a maximum of R8,000 plus VAT (maximum of R 9000 for joint applications married in community of property), and a reckless lending fee of R 1500.00 plus VAT.
There is a monthly maintenance fee of 5% of the instalment up to a maximum of R450 plus VAT. These fees ensure you always receive professional service from your debt counsellor and are included in your monthly instalments.
There is also a legal fee payable to the attorneys for obtaining a court order to ensure you are protected from your credit providers for the duration of your debt review. Your debt counsellor provides details of this in your application.
Will I Get a Loan After Debt Review?
Once you’ve successfully completed the process of debt review and received your clearance certificate, you can, indeed, apply for a loan. It’s important to remember that debt review isn’t a life sentence.
It’s also important to note, however, that you’ll need to start building up your credit score again before doing so. The reason for this is that debt review gives you a clean credit slate.
If you commit to the debt review process properly, your life can change. If you’re struggling to manage your debt, take that first step towards financial freedom and contact us today.
Don’t put it off, because your financial freedom is waiting!
How the Debt Review Process Works
The process is much simpler (and less daunting) than you might expect. It is summarised in a few easy steps:
Step 1: Request a Free Consultation from NDC
One of our professional consultants at National Debt Counsellors contacts you and takes you through a free financial assessment. Don’t worry, this is completely confidential!
Step 2: Complete Your Application Form
If you qualify for debt review, we send you an application form (Form 16) to complete and sign.
Step 3: We Notify Your Creditors
We notify your creditors that you’ve applied for debt review. From here, you and your assets are immediately protected under the National Credit Act.
Step 4: We Negotiate a New Payment Plan for You
This is where the magic happens. We negotiate your loan agreements with your credit providers and restructure your repayments to an amount that’s affordable for you.
Step 5: Pay a Single, Affordable Monthly Instalment
Once we’ve handled the above steps for you, you begin paying one easy monthly instalment via an accredited PDA (Payment Distribution Authority), which distributes the funds to your credit providers.
Step 6: We Make the Approved Plan an Order of the Court
Our panel of Attorneys apply to the Magistrates Court on your behalf to make your restructured repayment plan an official order of the court and ensure you remain protected during the process.
Step 7: Your Debt is Paid Off and Your Credit Record is Clear!
You then start to pay off your debt. Once it’s repaid, we issue a clearance certificate and notify the credit bureaus to clear your credit record. You are now able to live in financial freedom! Cue the budget-friendly celebration.
Now that we’ve covered in detail what debt review is, let’s look at how you can complete the process and attain your financial freedom.
How to Complete Debt Review
Debt review is completed in one of two ways:
Pay Your Debt
Firstly, and most obviously, you can complete the debt review process by paying off all your debt in full. It’s important to note that this only applies to unsecured credit and vehicle finance. You’re not required to pay off your home loan to complete the debt review process. As long as repayments on the home loan are up to date, you’re golden.
As your debts are repaid one by one, your debt counsellor collects paid-up letters from your creditors and shares them with you. Once all your debts are completely paid off, your debt counsellor issues you with a clearance certificate and notifies the credit bureaus.
You’re now debt-free, and your credit record is clear!
A Change in Circumstance
The second way to complete the debt review process is if you have a substantial change in circumstance and can now afford to start paying your debt again at the original contract terms. This means you can be declared no longer over-indebted by the courts. This only applies if there is no court order in place already declaring you overindebted. It’s important to note that if you request this, you’ll no longer pay your reduced monthly instalment amount. Rather, you’ll need to pay the amounts originally agreed with your creditors when you took out the loans.
You’ll also no longer benefit from the reduced interest rates negotiated by your debt counsellor. In addition, you’ll need to prove to the court that you have had a significant change in circumstance like a major promotion or that your partner has returned to work.
As a rule, we suggest that you rather follow the first option, you can always pay more towards your debt at any stage of the process and thus reduce the time you will remain under debt review. You’ll also continue to benefit from the improved terms negotiated for you by your debt counsellor on the first option. Overall, settling your debt in full is always the best option.
A Brief Warning
It’s important to be careful and practice healthy scepticism towards anyone who tells you that they can get you out of the debt review process for a fee by transferring to a new debt counsellor. This is not a legal practice. More often than not, these debt counsellors are not properly registered with the NCR and their actions are not in your best interest at all.
Staying aware of these kinds of scams will save you a lot of time and a lot of money.
How to Find a Reliable Debt Review Company to Work With
When you’re considering going under debt review with a company in South Africa, there are quite a few key elements to keep in mind when deciding which company to work with. Some helpful initial questions to ask can include:
- Are they a reputable company?
- Have they successfully helped previous clients undergoing debt review?
- Are their Debt Counsellors registered with The National Credit Regulator (NCR)?
- Have they partnered with a good payment distribution agency?
Why Debt Review with National Debt Counsellors is a Good Idea
The debt review process has a lot of benefits, the most significant is that it allows you to repay your debt in a structured and sustainable way. Your debt counsellor assesses your budget, considers essential expenditures such as groceries, housing, education, and transport, and then works out how much you can afford to pay going forward.
Here are some of the other main reasons you should consider working with us to help clear your debt through this process:
No More High Amounts
Your monthly repayments are reduced to an amount you can afford. This helps you slowly but surely step out of debt and into financial freedom.
We Cover You (and your goods)
We provide immediate protection to you and your assets (including your house and car), so there’s no need to worry when you’re under the debt review process.
We’re the Ultimate Middleman
We negotiate with your credit providers directly, so you don’t receive any more harassing phone calls.
More Peace, Less Stress
We negotiate lower interest rates on your behalf, and we extend your repayment terms. This means you get a bit more breathing room as you begin moving towards more financial stability.
We’re Comprehensive from Start to Finish
Once you’ve cleared your debt, we apply to clear your credit report. So, all you must do throughout the process is make your payments. We do everything else on your behalf!
The ultimate reason to apply for debt review is simply to get on a better financial wicket overall. To live debt-free is the goal, and with debt review it becomes possible.
Why Choose National Debt Counsellors?
We’re a team of leading debt review consultants who believe that debt doesn’t mean disaster. We assist everyday South Africans who find themselves struggling to meet their monthly financial obligations. Our team of Debt Counsellors are registered with the National Credit Regulator and offers you a no-obligation, free assessment of your financial situation.
Our reputation for providing exceptional service is only enhanced by the great relationships we’ve cultivated with all the major credit providers in South Africa. This gives us confidence to negotiate the best payment plan to suit your financial needs and ensures that we protect you and your assets.
