Beware of “Cheap” Debt Review

As a rule of thumb, it’s good to remember, that Lowest Instalment = Costly Repercussions

Cost-cutting is great, but when researching Debt Counsellors this should not take top priority. The cheapest debt review often has serious repercussions for the consumer as the client is not always the top priority for all Debt Counsellors.

The cheapest quote explained:

1. The instalment needs to be sufficient to pay capital plus interest. When the instalment does not cover capital plus interest:
   1. The Court or National Tribunal will not grant an Order;
   2. Without a Debt Review Order you are left unprotected against legal action;
   3. When the Court dismisses your application, you lose the legal action protection of the Debt Review process and any arrears become due and payable immediately.
   4. The arrears need to be paid immediately to avoid further legal action and repossession. In the case of a bond, the full outstanding balance could become due and payable when legal action is issued.
2. Creditors only reduce interest where the client offers a reasonable proposal.
3. Without a sufficient distribution instalment, the creditors will not reduce interest rates. This results in longer repayment terms for the consumer.

How to calculate the monthly interest added to your account:

Current outstanding balance x Annual Interest Rate percentage=, divided by 12

REMEMBER: Should your quoted debt review instalment be less than your total monthly interest you are at risk that your Debt Review will not be accepted by the Courts and you could be in a worse position after Debt Review, then before you applied.

Need advice? Contact us for sound, professional, honest debt advice.