The Debt Review Process

debt-counsellingDebt counselling has changed the way creditors (the companies that offer goods on credit) deal with debtors (people who owe money to creditors). If you or someone close to you is in a situation where monthly debt payments are no longer manageable, applying for debt review could be a beneficial step.

What steps are involved in the debt review process?

  • Your newly-appointed debt counsellor has 30 business days to decide whether you are over-indebted or debt stressed, and whether your creditors knowingly over-burdened you with debt.
  • If your debt counsellor finds fault with your creditors for providing you with credit recklessly, this finding must be reported to the National Credit Regulator (NCR) by the counsellor. The National Credit Tribunal (NCT) could then take your creditor to court, forcing your debt to be written off.
  • You are required to inform all your creditors in writing of the fact that you are receiving debt counselling. This must be done within 5 days of your application. Once your debt counsellor has accepted your case, he or she should inform your creditors, also within 5 days. This is done using a prescribed form, Form 17.1.
  • If your creditors accept the repayment plan drafted by your debt counsellor, you will be given a certain time period to repay your debt, at a fixed monthly amount. Any disputes between your creditors and the debt counsellor will be settled in the Magistrate’s Court.

What Debt Counselling Means for You

Consumers should note that debt counselling is not a payment holiday. While you are under debt counselling you will have to continue making your monthly payments, and if you fail to make even one payment your entire debt counselling will be declared null and void – an outcome that could lead to your creditors taking legal action against you.

While debt counselling isn’t a payment holiday, it is a holiday from credit: while you are under debt counselling you will be unable to obtain credit until your debt has been repaid. This consequence is just one reason why avoiding unnecessary debts is an excellent approach to managing your finances.

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