Debt reviews
Debt review is an application by a consumer to have his financial position investigated. Consumers apply for debt reviews when they feel they may have become over-indebted and are unable to meet their monthly debt obligations.
The debt review process came into effect in 2007, along with the National Credit Act (NCA) and the National Credit Regulator (NCR). Before these entities existed, over-indebted consumers were at the mercy of creditors and legal proceedings, with limited negotiating powers. Now, an appointed debt counsellor can by law negotiate on behalf of consumers to restructure their debt.
The debt review process:
The debt counsellor explains to the consumer what debt review is and the consumer completes a debt review application form. The completed form, with supporting documentation, is handed over to the debt counsellor. Within five days, all creditors are notified of the process and no legal action is possible, provided summons have not already been issued. Both the creditors and the consumer supply all their debt information and this is compared by the debt counsellor before a ruling is made whether or not the consumer qualifies for debt counselling.
Following the debt review application, there are two possible scenarios. Firstly, a debt review agency may review a consumer’s financial position and determine that the consumer is not over-indebted. They may suggest an action plan of debt consolidation by means of a consolidation loan or by using the consumer’s home loan, and deem these measures sufficient to afford the consumer the necessary relief.
Secondly, they could determine that the consumer is over-indebted, in which case the consumer would be put under debt counselling. All the consumer’s creditors, as well as the credit bureaus, would be alerted of the fact that the consumer is under debt counselling. The debt counsellor would negotiate with the consumer’s bank and creditors and arrange for easier repayment terms. These may be obtained through a consolidation loan, extended repayment periods, lower interest rates, or combination of these.
Court judgements against consumers do not necessarily mean that they would not qualify for debt reviews.
Consumer Assist:
- provides consumers with simple, easy to understand information on the debt review process, and
- introduces consumers to experienced Debt Counsellors who have agreed to adhere to the Consumer Assist code of conduct:
- to act in the consumers' best interest
- to comply with NCR fee structure
- to offer service excellence
- to always act with integrity
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