Debt review meaning
Debt review in South Africa, also known as debt counselling, was introduced in 2007 with the National Credit Act and is there to assist South Africans who are battling with repaying their debts. These debt repayments can include their houses, cars, credit cards and accounts. It is a legal process that regulated by the National Credit Regulator (NCR) and helps individuals get relief from overwhelming debt.
In this blog post we'll unpack the truth about debt review, debt review pros and cons, what it means to be under debt review any consequences of the debt counselling process.
What happens when you are in debt review
This means you have applied for debt review and a registered Debt Counsellor has worked through your income and expenses and has determined that you are over-indebted. In short, when you are in debt review it means a Debt Counsellor has worked out a repayment plan for you to help you manage repaying your debts.
How debt review works
Once the Debt Counsellor has determined that you have too much debt, your Debt Counsellor will put together a repayment plan for you, inclusive of repayment terms, for your outstanding debt and you are placed under debt counselling.
Your Debt Counsellor negotiates with your creditors so that you have reduced interest rates on your loans, which could end up saving you money on your total debt amount!
Read this blog post about how The Dlomo family saved R23 000 on their monthly debt repayment thanks to Meerkat!
This repayment plan is then approved by your creditors.
The debt counselling company will then approach the court on your behalf so that a court order is put in place. You now have legal protection over your assets like your home and your car.
This plan is finally submitted to a registered payment distribution agency (PDA) that makes all the payments to your creditors on behalf of the Debt Counsellor.
You will then pay one reduced monthly payment for all your debt.
Once all your debts have been repaid, you will be issued with a clearance certificate by your counsellor and they will notify the credit bureaus that you are no longer under debt counselling.
Debt counselling is not like blacklisting and it also does not mean you have a criminal record. Once you have successfully completed the process, any record of being under debt review will be removed from your credit record.
Watch this video with Founder & CEO of Meerkat, David O'Brien as he discusses the process
▶︎ Read more about Debt review: Everything you need to know.
Benefits of debt review
- Your debt monthly repayments are reduced. This process means you will only have one amount to pay each month.
- You can save up to 50% on your monthly debt installment.
- Debt review protects you from losing your property and your car, giving you peace of mind.
- Your Debt Counsellor will deal with all your creditors so you no longer have to avoid their phone calls.
- You get a clearance certificate and a clean credit slate, putting you in a stronger position to apply for credit at the end of it.
▶︎ Debt Counselling / Debt Review - Find out what you need to know
Ready to start your debt-free journey?
Fill in the contact form and one of our friendly Debt Counsellors will get back to you.
What are the disadvantages of debt review?
A common disadvantage of being under the debt review process that you can't borrow money when you are in the process. While this is true, it's very important to note that this is only temporary. Once you have successfully completed the debt review process, you WILL have access to credit again.
In fact, after completing the debt review process, you will probably be in a better position to apply for credit because your credit score would likely have improved. During the process, you consistently show that you make payment towards your creditors which is a huge benefit when applying for credit.
Did you know: your payment history is the factor that contributes the most to your credit score.
▶︎ Debt Counselling / Debt Review - Find out what you need to know
Ready to start your debt-free journey?
Fill in the contact form and one of our friendly Debt Counsellors will get back to you.
How much does debt counselling cost?
Debt review fees, like the time spent in the process, is dependent on how much debt you have. What's very important is that The National Credit Regulator (NCR) provides a guideline for all the fees involved in debt review. This means a Debt Counsellor cannot exceed certain amounts as prescribed by The NCR.
Your debt counselling fees are usually taken from the first two monthly installments you make towards your repayment plan with debt review. It's also important to note that free debt review does NOT exist.
How long can one be under debt review in South Africa?
The exact time someone spends under in the process differs from person to person. The reason there is no set time is that every person has a different amount of debt and a different affordable monthly installment they can make, while still prioritising their daily living expenses.
Will I get a loan after debt review?
Once you have successfully completed the process and received a clearance certificate, you can apply for a loan. Debt review is not a life sentence.
▶︎ Can I get a personal loan while under debt review?
Can debt review be cancelled?
Debt review can only be cancelled if you have paid up all your debt. If you have paid all your debt and you still have a debt counselling flag on your credit report, we can get you removed from the debt counselling process.
Can I pay my creditors directly while under debt review?
At the start of the process, you can either choose to pay your creditors directly or have the debt counselling company and the registered PDA handle your payments on your behalf. Most people opt for their payments being handled as this leaves you with less stress and you don't have to worry about missing a payment.
Why Meerkat?
Meerkat is registered with the NCR (National Credit Regulator – NCRDC2613). We understand that life happens, and you can start to fall behind on your debt repayments. We can help you regain financial control and walk the journey with you to becoming debt-free. As a team, we’re looking out for you.
We've also been voted as one of the Top 10 Large Debt Counsellors in South Africa!
Leave your details and we’ll give you a call back to discuss how we can help.