Thanks to the recent economic crisis, people are more familiar with debt than they would like to be. Unfortunately, they are also applying for debt review for all the wrong reasons; thinking they can avoid their debts when they really need to confront them with lifestyle changes.
What does it mean to be under debt review?
Debt review was introduced in 2007 with the National Credit Act and is there to assist people who are battling with their debt. Whether it is through repayments on their houses, cars, credit cards, loans or accounts and are facing possible blacklisting and / or repossession.
Being under debt review means you have appointed a registered debt counsellor, who has determined that you are over-indebted and cannot afford your current monthly repayments.
Your debt counsellor informs your creditors that you have applied for debt review and then draws up a revised repayment plan that better suits your monthly budget. The revised plan is submitted to all your creditors for approval. Once accepted, no legal action can be taken against you.
All your existing debit orders are cancelled and you make one reduced monthly repayment to a registered payment distribution agency (PDA). This agency will distribute your money to all your creditors every month on behalf of your appointed debt counsellor.
Once all your debts have been repaid, you are issued with a clearance certificate and the credit bureaus will be notified that you are no longer under debt review. Any record of being under review will be removed from your credit report once the process has concluded.
So what should I do if I’m under debt review?
While under debt review, you should stick to your new repayment plan and not put your debt review programme at risk. Remember, debt review is not a blacklisting but a protection that was put in place to assist those that are debt stressed.
It will be removed completely once all debt is paid off.
And what shouldn’t I do when under debt review?
When you’re under debt review it is important to stick to your repayment plan as skipping an agreed payment will cancel the agreement . This means your creditors will be entitled to contact you direct to collect any outstanding balance.
You cannot use your credit cards or apply for unsecured loans as this will put you at risk of having your whole debt review terminated.
You also won’t be able to get any further credit whilst under debt review, to you give the opportunity to pay off your existing debt, instead of spiralling further into more debt.
Reasons why you SHOULD GO under debt review
- The debt review process involves reducing the amount you repay each month as well as reducing the interest on your current loans. This means you can keep up with your repayments – as well as afford your essential living expenses.
- Debt review protects you from losing your property and assets. Once your creditors accept the revised repayment plan they are not allowed to take legal action against you.
- You get a clearance certificate and a clean slate at the end of the process.
REMEMBER! Debt review is not a way of financing a lifestyle beyond your means, or a quick fix that will get you out of paying off your debts. Our team at Meerkat will present you with options that are designed to improve your financial circumstances, not to put you deeper in debt – so Contact us today!
Reasons why you SHOULD NOT CANCEL your debt review
- Your original interest rates and other contractual terms will apply again.
- Credit providers will be able to take legal action against you once again.
- You will no longer be on your way to rehabilitation, but will only continue to get into more debt.
- You won’t be moving towards getting a clearance certificate.
- Your credit profile will be adversely affected.
- You may be rejected for certain positions of employment, should you apply for them.
- You will be rejected for loans at reputable financial institutes.
So contact Meerkat today and we’ll get you well on your way to becoming DEBT-FREE!
Remember Meerkat, We’re looking out for you!