What is debt review?
Debt review is a formal legal process that helps over-indebted consumers who are struggling to meet their monthly debt obligations. A debt counsellor approaches your credit providers on your behalf with a manageable monthly amount for a maximum period of 60 months.
Household debt to income ratio in South Africa is amongst the highest in the world at approximately 72%. Debt review also known as debt counselling was introduced in South Africa as a formal legal debt relief measure under the National Credit Act (NCA) 34 of 2005. This was to assist over-indebted consumers by applying for debt review and also to identify and profile cases of reckless lending with the aim to get the cases suspended.
what is the Debt review process?
- A consumer approaches a Debt Counsellor and completes a Form 16 application form for debt review.
- Debt Counsellor informs the credit bureaus through the National Credit Regulator Debt Help System (DHS) and the credit providers that you have applied for debt review by way of Form 17.1.
- Credit providers furnish the Debt Counsellor with certificate of balances of the consumers’ debt commitments.
- The Debt Counsellor completes a financial assessment of your situation using the certificate of balances.
- If you are over-indebted, the DC informs credit providers by sending Form 17.2 advising them that you are overindebted.
- Within 30 days of your application, the Debt Counsellors submits a suitable repayment plan.
- If accepted by credit providers, the consumer will start paying in line with the negotiated payment plan.
- The Debt Counsellor will approach the courts to obtain a debt review court order which makes binding the rearranged payment plan.
- Once you have finished paying off your debt, the Debt Counsellors issues a Form 19. This is known as a clearance certificate issued to a consumer after he/ she has satisfied all obligations under every credit agreement (excerpt a mortgage bond) that was subject to debt review court order.
what are the Benefits of debt review?
- Legal protection - your assets are protected while under debt review.
- Interest rates on your debt commitments are reduced.
- You pay one reduced monthly manageable amount that pays all your accounts.
- There is no permanent record of having applied for debt review once the Debt Counsellor removes you from debt review.
If you are really stretched and struggling to service your debt every month, contact Debt Sage. We will guide you through the entire debt review process and help you deal with your debts.