What Is Debt Review

Basically, it is a legal process that allows you to get relief from your creditors whilst providing you with a structured repayment plan to pay off all of your debt.

The way the review process works is to provide an over indebted consumer legal protection from his creditors & an affordable restructured debt repayment plan.

Once the client’s financial situation has been assessed by a reputable debt counsellor, creditors’ interest rates & payment terms will be negotiated to create a mutually beneficial payment plan.

You can voluntarily withdraw from the process if your financial situation has improved significantly.

Furthermore, your debt counsellor does not have statutory powers to terminate or withdraw you from the process.

You would have to approach the court in order to cancel the review process.

However, if you have not yet been declared over indebted, and Form 17.2 has not been processed, you can cancel your debt review by emailing [email protected].

Once you have paid off all your debt, your debt counsellor will send your debt clearance certificate to all your creditors, the credit bureau & the NCR notifying them of your new ‘debt free’ status.

This will ensure that you are no longer flagged as being under debt counselling, therefore allowing you to take out new loans or other credit.

What if you’re under debt review and need a loan urgently? Getting any type of loan while you are under debt review is prohibited in terms of the NCA (National Credit Act).
This applies to getting any sort of credit, which is in the Act to protect clients under review from becoming further indebted & to discourage irresponsible lending.

The process is only for over indebted consumers who would have their status confirmed by a reputable debt counsellor.

3 Possible Cases For Undergoing the Review Process

1. Where the consumer may appear to be over indebted but is just doing a poor job in managing their debt.

A good debt counsellor could help them structure a workable budget to manage their debt properly.

2. Where the consumer appears to be over indebted but the situation is caused by a temporary spike in unplanned costs caused by a divorce or medical fees.

3. Where a consumer is clearly over indebted and cannot pay their creditors causing mounting debt pressure.

Once the court has declared the consumer to be over indebted, the credit bureau will list the consumer accordingly.

This will then allow the NCA to make provision for one or more of the consumer’s credit agreements to be rearranged by the debt counsellor in accordance with the review process.

Not every credit agreement needs to be included.

The downside of this is that the consumer may not use any of the revolving credit facilities or apply for new credit as he may not incur any further debt whilst paying off the current debt.

No, but you will be able to pay off your debt according to a payment plan that is formulated by your debt counsellor at affordable amounts.
This will allow you to become debt free if you stick strictly to making all payments.

The process usually takes between 3 to 5 years before your debt clearance certificate is issued.
However, these are other factors that will determine how long you will be under debt review;

1. How much debt you have
2. How much you are able to repay each month
3. The interest rates you’re being charged
4. The terms your debt counsellor negotiated with your creditors
5. The commitment you exercise in terms of in meeting your payment plan

By increasing your disposable income, with the tips below, you will be able to pay off more of your debt & end the process quicker;

1. Earn more money (work overtime, get a side hussle or second job)
2. Sell your extra car & use public transport
3. Compare insurance companies & medical aids to ensure you have the most cost effective
4. Use any savings to pay off smaller creditors to reduce the number of creditors & thereby reduce interest payable
5. Use loyalty programs for money back points & other benefits

Yes, it not only provides debt relief to over-indebted consumers from their creditors, but by staying with the process, it will eventually help you pay off all your creditors and enjoy a debt-free life.

This is not to say that it will be easy, as your counsellor will structure a repayment plan that won’t give you much disposable income for yourself, which is what many people struggle with.

You are strongly advised to adhere strictly to the repayment plan that you’ve agreed to with your debt counsellor.

If you miss a payment, not only could your creditor cancel the process & take legal action against you, but you would lose the legal protection you have from the rest of your creditors.

The debt counsellor handling your case will charge you a fee that is regulated by the NCR.

Yes, if any of your creditors reject the payment plan, your debt counsellor will have to create a new payment plan that is acceptable.

If this is still declined, then your case can be referred to the Magistrate’s court where it will hopefully be found to be reasonable.