What is debt review? - Debt Counselling or debt review is a regulated process whereby a debt counsellor helps over-indebted consumers by developing an affordable repayment plan. The debt counsellor will then negotiate a restructured payment plan and obtain a court order confirming the new repayment plan. The debt counsellor deals with the customer’s creditors on their behalf in order to have the credit agreement extended and the repayments reduced.
What does it mean to be over-indebt? - You are over-indebted if you are unable to pay your financial obligations as agreed in your original credit agreement. If you spend or owe more money than you earn, you are likely to become over-indebted.
Will debt counseling influence credit record? - If you are placed under debt review, it will be indicated next to your name at the credit bureaus as a red flag. But, once all your debts have been settled, a clearance certificate will be issued and there will be no indication at the credit bureaus that you have been under debt review. You can then enter into credit agreements again.
Will i be able to apply for loan while under debt review? - While you are under debt counseling, you will not be allowed to take out any new credit, e.g. a paydayLoans, home loan, overdraft, credit card, etc. This is done to ensure that you don’t incur further debts, as the purpose of debt review is to reduce your current debt burden and to protect credit from being accused of reckless lending, if they are aware that you are over-indebted.
how to check if your name is under debt review ? - Check your credit bureau report you can get a credit report from Experian, TransUnion, XDS and Compuscan etc. This can be done for free every year. If the bureaus have not removed the 'debt review' red flag from your profile, it will be shown on the front page of your credit report.
how long does debt review last ? To understand how long it takes to get out of debt review, you have to know how the debt review process works and how a debt counsellor helps you. Debt review is a rehabilitation program to help South Africans who are over-indebted. Being over-indebted means you do not have enough money to pay all your debts every month. Under debt review, a debt counsellor finds out how much money you owe and how much money you can spend on debt every month. Then, they make you a new, affordable repayment plan. In the new plan, they tell your credit providers that you need to pay less every month. This also means you need more time to settle the debt. Everyone has a different amount of money they owe to credit providers. Everyone has different credit providers. Everyone has a different amount they can spend on debt every month. So, everyone’s debt review plan is different and takes a different amount of time to finish, the ncr advises that a consumer under debt review should not be under debt review for more than 5 years.