Debt review, also known as debt counselling, is a debt relief process that assists over-indebted consumers to pay off their debt. Introduced in 2007 by The National Credit Act (NCA), the programme helps to prevent consumers from being blacklisted and having to deal with the long-term effects of debt, which can be dire in some cases.

Furthermore, this process makes sure that debt counsellors follow specified rules and regulations when assisting consumers with their monthly debt payments. The debt counselling process is quite a lengthy one and getting rid of debt doesn’t happen overnight. As much as you might think it’s impossible to get out of debt, the truth is it’s very possible! We delve deeper into what debt counselling entails, why you might need it and how you can be debt-free in the long run.

WHAT IS DEBT COUNSELLING?

First, the debt counsellor assesses your outstanding debt and comes up with a debt repayment solution. Your debt counsellor renegotiates your credit providers’ interest rates with the goal of reducing them to realistic repayment amounts. By doing so, paying off your outstanding debts becomes easier on these new terms.

Your debt counsellor will structure an affordable repayment plan, which is a strict budget you must adhere to in order to meet your renegotiated monthly payments. Consumers, who are under debt review, are protected from being blacklisted during this time by the National Credit Act (NCA).

This also means that it’s illegal for creditors to demand higher interest rates from those who are receiving debt counselling. It’s also important to note that creditors may not contact the consumer directly but must communicate through the debt counsellor, who handles all legal matters on behalf of the consumer. It’s important for consumers to work with debt counsellors, who are registered with the National Credit Regulator to avoid being scammed.

DO YOU NEED A DEBT REVIEW?

South Africa has over 1,500 registered debt counsellors listed on the NCE’s website. Before applying for debt review, shop around for the right counsellor for you, since debt review removal companies can be pretty costly. It’s also important to know whether you might need debt counselling before it’s too late. Here are some questions you should ask yourself to determine if you need assistance:

• Have you maxed out your credit cards/overdraft?
• Have you fallen behind on one or more payments?
• Are you living within your means?
• Are you failing to save money?
• Are your living expenses preventing you from setting up an emergency fund?
• Are you avoiding debt collectors’ calls?
• Are you taking out payday loans to cover your expenses?
• Are you stressed about money?
• Are you borrowing money and selling assets to keep afloat?

You don’t have to be a slave to debt. If you’re struggling, there are debt relief agencies that can assist you in getting rid of debt for good. For some, the process might be longer in terms of years as opposed to months. However, you can achieve financial freedom! It doesn’t matter how much outstanding debt you have; you can always apply for debt review to assist you and your family.