Welcome back to my blog, today I am going to be talking about debt review. In my coaching practice I am learning that most people signed up for a debt review and they did not understand what they were signing up for. If you are new here please take time to read about what this blog is about here.
What Is A Debt Review?
A debt review is a statutory relief process by the National Credit Act (NCA) to offer relief to consumers that are over-indebted. It is process whereby a debt counselor assesses your debt and do a restructured debt payment plan. The debt counselor then negotiates your interest rate and payment terms with your credit providers.
What Is The Purpose Of A Debt Review?
The debt review process was introduced by the NCA as a rehabilitation program that helps people who are over indebted to be protected from being placed in a long term personal administration. The major benefit of it is that it can protect your assets from being repossessed.
Things To Know About A Debt Review
- There are fees involved that you are going to be charged.
- Not all creditors will agree to the negotiation of the interest rates.
- Once you enter the process, it can be very difficult to exit.
- You cannot take further debt whilst under the debt review flag
The Cost Of The Debt Review
There are fees charged by the debt counsellor to initiate and maintain your debt review process. These fees are regulated by the National Credit Regulator. Below are few of these fees:
This is an upfront fee charged to handle your Debt Review application. It is basically a fee for the time and effort it takes to complete your application.
One of the things a debt counselor will do is to restructure your payment instalments. A registered Debt Counsellor is legally allowed to accept the 1st restructured repayment as compensation for the work involved in getting the you through the Debt Review process. Although it is sad that the he amount is capped at R8 000 for individuals and R9 000 for the people married in community of property.
This is an ongoing fee that is 5% to your revised monthly installment but not more than R400. This means that if your installment is R6000. 00 you ongoing fee will be R300.
How To Get Out Of The Debt Review?
A person can get out of debt review. However there are conditions to be met for the flag to be removed from your profile.
When all listed accounts have been settled
When you have settled all the debts that were listed under debt review the debt counsellor must issue the clearance certificate
Where all accounts have been paid up but there is a home loan account.
If accounts that were subject to the debt review have been paid but there is a home loan account and there are no arrears a clearance certificate may be issued.
Through an application to rescind/terminate the debt review from the court
If your debt review was made an order of court, an application to rescind the debt review order must be made to court. When approved payments will be made directly to the creditors by way of negotiated payment arrangements if you are not already doing so. If your debt review was not made an order of court, then an application must be made to court to declare that you are no longer over- indebted.
If you want to exit a debt review and you still have outstanding accounts, an assessment and evaluation to determine whether you are no longer over indebted must be conducted.
- Fees are not limited to the mentioned. There are other fees like : Application Fee, Reckless Lending Fees and National Tribunal Service Fees.
- Before considering the debt review process, try to negotiate debt payments plan by yourself. If you need a structured payment plan feel free to contact me at +27 74 931 1000
Thank you for taking the time to read my posts post. I hope I have managed to simplify the debt review process and answered some of the questions you have. Remember you can always book a one on one coaching session with me by clicking here or sending me a message via whatsapp +2774 931 1000