Debt review is a management system to protect your assets, while you pay your creditors. Once you have applied for debt review and the Court has ordered for such, your assets cannot be seized as long as you pay the monthly reduced amount.
How does it work?
Instead of paying each of the creditors, a single monthly instalment is paid, from which the legal fees, debt counsellor administration fees and the amounts allocated to each creditor are distributed to the relevant parties. The process is an effective debt management system, if you are over-indebted, have a monthly income, are not under administration and do not have pending judgments against you. Any debt for which judgment has been taken place cannot be included in the debt review process.
Is it a payment holiday?
No. It is a management process which allows you to keep your assets and make a more affordable monthly payment. The debt counsellor reviews your application and if found that you are over-indebted, restructures the budget to allow for enough money to pay for your listed basic monthly expenses. The amount that remains is used for repayment of the debts.
Your current service contracts are not affected and you will thus still be able to rent a house, pay your cellphone subscription and DStv, but you cannot enter into any new credit agreements during the period.
Once the full debt has been paid, the counsellor issues a debt clearance certificate and the note for debt review, connected to your name at the credit bureaux, is removed. You can then enter into credit agreements.
Can one pay the credit providers directly while under debt review?
No. If you want to pay lump sums in addition to the monthly repayment, you need to arrange for such with your counsellor. You may for instance, inherit a few thousand Rands or use your bonus to make such a payment, in order to pay-off one of the smaller accounts.
Can one still undergo debt review if you have received a letter of demand?
Yes, provided you apply for debt review within 20 days of receiving such.
Can one apply for a debt consolidation loan to pay-off the debt review amount?
Your financial situation may have changed over time, leaving you with more disposable income. You can then opt for debt consolidation as a means of debt management, but must apply to the relevant institutions with the help of your counsellor. Note that only in rare cases are such consolidation loans awarded.
What happens if the debit order fails?
A debit order for the consolidated amount is set against your bank account. The amount is debited the same day every month. However, should there be insufficient funds and the payment cannot go through, you need to contact the counsellor immediately to request that they repeat the debit. The independent financial institution that is in control of the debit and redistribution of the amount to creditors will then run the debit order again. If, however, the collection remains unsuccessful and you do not make any arrangements for an alternative way to ensure that the instalment is not missed, the credit providers may withdraw from the process and then the amounts in arrears become payable in full. You should avoid such a situation and it is thus recommended that you make arrangements for funds to be in your account on the date of the debit.
What is sequestration?
Sequestration is another debt management solution. In this instance, you surrender your estate as part of the process for having all your debts written off. It will make it possible for you to adjust your lifestyle to fit within your total available budget. You will no longer have any debt and will not have to be concerned about creditors taking legal action against you. You will not need to appear in court or have immovable property. Our counsellors handle the negotiation process on your behalf.
Where to Get Help
You can use the iNDC online pre-qualification form to see if you will qualify for debt review as a debt management solution. If you are not over-indebted, you can make use of our counsellors’ guidance in restructuring your budget to meet your obligations. If you are over-indebted, contact us for debt management assistance.