This article provides a comprehensive overview of the debt review process in South Africa, explaining each stage in detail and highlighting its benefits for consumers struggling with debt. From initial consultation to successful completion, the article demystifies the process and offers valuable insights into navigating financial challenges.
Navigating the complex world of debt can often hinge on the unknown: how the process works, what it entails, and whether it is a viable solution. Benay Sager, chairperson of the National Debt Counsellors’ Association (NDCA), emphasizes that the debt review process should be reasonably straightforward for the consumer. The first step involves contacting a registered debt counsellor via the NDCA website or by checking the list of registered counsellors on the National Credit Regulator’s website.
During this initial consultation, the debt counsellor will assess your financial situation, including the amount of debt you have and whether debt counselling is a potential solution. Once you have applied, the debt counsellor will inform all of your creditors and the credit bureaus that you have applied for and are undergoing debt counselling. Sager explains that this step is crucial as it helps alleviate a lot of stress, as creditors then need to deal directly with the debt counsellor and not you. As part of the debt review process, the debt counsellor will negotiate lower monthly payments on all credit agreements that fall under the National Credit Act (this excludes school fees and municipal rates). Sager states that the restructuring of the debt repayments will be based on how much consumers can afford to pay back each month. 'It strikes the balance between your overall debt levels, how much you can pay each month, and what the creditors are willing to accept,' she said. Since it involves simultaneous negotiation with all creditors (in some cases up to 12 creditors), it is not something most people can easily do on their own,' Sager added. 'Once these terms have been negotiated, the rearranged debt is approved by a court or the National Consumer Tribunal. This ensures the renegotiated rates are fixed for the duration of the debt counselling and creditors cannot change them or demand higher payments.' Throughout the debt review process, you will make one affordable payment each month via debit order to an independent payment distribution agency (PDA). The PDA will then distribute the money to creditors for the duration of the plan. The typical duration of debt review is between three and five years and depends on various factors, including your income, expenses, and the amount of debt you have. In some situations, you can increase the monthly payment or pay a lump sum to reduce the period or end the process earlier. Once you have successfully completed the payment plan, you will receive a clearance certificate which will confirm that all the accounts listed under debt counselling are paid up. This excludes home loans as they do not need to be fully paid but must be up to date
DEBT REVIEW DEBT COUNSELLING CREDITORS FINANCE NATIONAL CREDIT REGULATOR
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