Debt review and debt restructuring are commonly seen as separate processes, but they are essentially the same thing.
When a consumer is over-indebted, it means they can’t pay off their debts on time. If their total debt exceeds their net income after covering living expenses, they are considered overindebted.
What is Debt Review?
Debt review is a formal debt restructuring process for South Africans struggling to make ends meet at month-end. It was created under the National Credit Act 34 of 2005 (‘NCA’) and was the government’s answer to the rising problem of consumer debt and the chronic over-indebtedness that plagues many South Africans, as we’ve pointed out above.
The debt review process was created with you, the consumer, in mind, and is highly regulated and can only be conducted by a National Credit Regulator (‘NCR’) qualified Debt Counsellor. The process allows the debt counsellor to negotiate and restructure your debt to an amount that you can afford each month, with the goal of helping you pay off your debt in full.
All that’s required of you during the debt review process is to continue paying your reduced monthly instalments, and once your plan is completed and your debt is paid off, your credit record will be cleared, and you can start living debt-free.
The Advantages of Debt Review
Here are some of the reasons you should consider working with us to help clear your debt through this process:
No more high amounts
We reduce your monthly repayments to an amount you can actually afford. This helps you slowly but surely step out of debt and into financial freedom.
You (and your goods) are covered
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 have to 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.
Debt Review vs Debt Restructuring – Dispelling the Myth
There’s a common misconception that debt review and debt restructuring are distinct processes. However, in reality, they are intricately linked, with debt restructuring serving as a subset of the broader debt review framework.
In debt review, a registered debt counsellor, acting in accordance with the provisions of the National Credit Act 34 of 2005, assesses one’s outstanding debt obligations. This involves a comprehensive evaluation of their financial circumstances to develop a structured and sustainable repayment plan.
Crucially, debt review is a legally formalised process that offers essential protections for both consumers and creditors. Through negotiations with creditors, the debt counsellor aims to secure favourable terms, such as reduced interest rates and extended repayment periods.
This not only aids in relieving the financial burden on the consumer but also ensures that creditors receive timely payments, thus upholding their rights in the process.
Debt Review is the Solution
When an individual opts for debt review, they undergo a thorough financial assessment conducted by the debt counsellor. Based on this assessment, a tailored repayment plan is crafted to suit their specific needs and capabilities.
Subsequent negotiations with creditors seek to restructure existing debt obligations by modifying interest rates, extending payment terms, and removing extra fees and charges.
Under the umbrella of debt review, individuals make a single monthly payment to the debt counsellor, who then distributes these funds among the respective creditors. Importantly, this single payment streamlines the repayment process for the consumer, providing greater clarity and ease of management.
Moreover, one of the most significant advantages of debt review is the legal protection it affords to individuals facing financial hardship. Once enrolled in debt review, consumers are shielded from legal actions by creditors, including repossession, legal proceedings, and garnishee orders.
This ensures a measure of stability and security during what can be a challenging period.
While debt review encompasses the broader framework of debt management, voluntary debt restructuring offers a more focused approach for individuals seeking to consolidate specific debt obligations.
Although it lacks the formal legal status of debt review, voluntary debt restructuring provides flexibility and control. This allows individuals to halt the process at any point if needed.
Ultimately, whether through debt review or voluntary debt restructuring, the overarching goal remains the same – to alleviate the burden of debt and pave the way towards financial stability and peace of mind.
By understanding the nuanced relationship between debt review and debt restructuring, individuals can make informed decisions that best suit their financial circumstances and aspirations.
Want to Learn More About Debt Review?
At National Debt Counsellors, our mission is to help South Africans break free from the stress of debt and enjoy financial freedom. We’re experts in both debt review and debt restructuring, and we’re here to guide you every step of the way.
Thanks to our partnerships with major credit providers, we can negotiate lower monthly payments that fit your budget. And the best part? Our financial assessment is completely free, with no obligations. Once we understand your situation, we’ll advise you on whether debt review is the best choice for you.
When it comes to affordability, debt review is hard to beat. It’s one of the most cost-effective options available, giving you peace of mind without breaking the bank. So, if you’re ready to take control of your finances and live debt-free, get in touch with us today. We’re here to help you on your journey to financial stability.
