Here are some common misconceptions or misunderstandings about Debt Review
- When you apply for Debt Review, you are blacklisted.
- Debt Review takes 5 years to complete
- I have to appear in Court when I am in Debt Review
- Debt Counsellors just take your money and do not pay your creditors
- Debt Counselling only applies to those in extreme debt
- You must pay upfront fees
- You pay a reduced instalment but over a longer-term
- Debt Review will affect you when applying for work or rent
1. Debt Review does not work
If that was true our firm would not have been around for 10 years and have helped thousands of clients become debt free.
Debt Review definitely works but requires the cooperation of the client. Often people think that Debt Review only requires a signature and off you go.
In order for your Debt Review to be successful, you need to 1) understand that your Debt Review is as much your responsibility as it is your Debt Counsellors’ responsibility; 2) be honest in your application and attend to the requests submitted by your Debt Counsellor.
Debt Counselling does not require too much involvement from the client except for submitting the required documents timeously and most importantly ensuring that the monthly Debt Review instalment is paid every month. When you adhere to these two “rules”, your Debt Review will be hassle-free and without any complications.
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2. When you apply for Debt Review, you are blacklisted
You are not “blacklisted” when you apply for Debt Review. Once you apply for Debt Review the Debt Counsellor registers you on the National Credit Regulator’s Debt help system which in turn informs all credit bureaus that you have applied for Debt Review and therefore this will be noted on your credit profile.
This is to avoid debt review clients applying for more credit as should you access more credit this will be considered Reckless Credit and you can apply to have the debt, which was granted recklessly, written off.
Once you have settled all the debt, or exit the debt review process, this adverse listing is removed from your credit profile and you can immediately reapply for credit.
3. Debt Review takes five years to complete
Debt Review takes as long as you want it to take. We offer flexible repayment plans to all our clients whereby they choose whether the debt is settled over 12, 24, 36, 48, 60, or 72 months. This all depends on their affordability.
The Debt Review repayment term is also flexible as in we are one of very few Debt Counselling firms who actually conduct an annual review on all our clients’ files.
This is to ensure that your Debt Review is aligned with your financial position and should your financial position improve over the years we will advise you to increase your instalment to exit debt review sooner, and same obviously applies for the contrary.
4. I have to appear in Court when I apply for Debt Review
All Court applications are dealt with by the attorney appointed by your Debt Counsellor. It is only in very special circumstances that the Magistrate might ask the consumer to be present at Court, but this is an exception to the rule. Debt Counsellors are not present during the hearings either and are also only called to Court in special circumstances.
5. Debt Counsellors just take your money and do not pay your creditors
This might have been the unfortunate case for a small number of Debt Review clients who landed up with the wrong “Debt Counsellor”.
In terms of our conditions of registration with the National Credit Regulator, a Debt Counsellor may not possess or have access to a client’s funds. We make use of an NCR registered Payment Distribution Agent, DC Partner, who manages our client’s payments and distribute it among their creditors in terms of our agreement with the creditors.
Our clients receive an SMS once the debit order was deducted from their account, another SMS once the funds have been distributed amongst the creditors and a monthly statement to confirm the distribution and their Debt Review progress.
By following this process our clients rest assured that their monthly payments are safe and distributed where it is intended.
6. Debt Review only applies to extreme cases
This is also untrue as we have clients in Debt Review with a total outstanding balance of R30,000. There is no moratorium in terms of the amount of debt you must have to apply for Debt Review.
The Debt Review process is there to assist all over-indebted consumers. Should you be unsure whether this is for you, why not see for yourself by completing our online self-help debt assessment which provides instant results.
7. You must pay upfront fees
Should your Debt Counsellor ask you to pay upfront fees, you are most likely at the wrong Debt Counsellor and it would be best to get out of there. All our fees are regulated by the National Credit Regulator and we do not charge any upfront fees.
All the fees applicable to your application for Debt Review is incorporated into your debt instalment which is paid to the Payment Distribution Agent (PDA).
Therefore it is simple, once you have applied for Debt Review you no longer pay your creditors directly, should you not wish to, all the payments are redirected via the PDA so you only pay your monthly instalment as agreed upon with your Debt Counsellor and everything is taken care of. Should you need more information in terms of the fees applicable to Debt Review, please view.
8. You pay a reduced instalment over a longer-term
Upon assessing your financial position, prior to your application for Debt Review, we will make recommendations in terms of what we suggest your Debt Review instalment should be.
This is calculated in terms of what you can afford and what credit providers will consider reasonable to reduce your interest rates.
Reducing the interest rate is very important should your repayment term be of concern to you. We make use of the Debt Counselling Rules System (DCRS) which in laymen’s terms is an NCR implemented system which reduces your interest rates on all credit agreements, should your application conform to the relevant rules.
In some instances the interest on unsecured credit agreements are reduced to 0.01% per annum, so you can imagine the massive saving in interest and the reduction in repayment terms. Our clients also have the luxury of choosing a repayment term which they are comfortable with.
9. Debt Review will affect you when you apply for work or rent
This is obviously also untrue. People do claim to been rejected for job applications due to their Debt Review status, but usually only when applying for work in a financial position where this person has access to company funds and the company sees their financial position being a risk to them.
I can assure you should the company you are applying to implement this procurement policy, they will check your credit history and should there be any reason for concern you will not be accepted in any case.
The company also will never admit hereto as this will be considered discrimination. Your Debt Review status should not have any effect on your employment applications.
With regards to rent, this is also absurd as we merely issue you with a letter confirming the monthly provision amount for rent in your budget and you can apply for any accommodation with this letter, as long as the monthly rent is not more than what was provided for in your budget.
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Frequently asked questions about debt review
Do I Qualify for Debt Review?
To qualify for Debt Review you need to have an income and you must be over-indebted or soon to be over-indebted. Should you be unsure of your status you are welcome to visit our office for an obligation free consultation.
Get a Free Online Assessment to check your status
Why use Debt Counsellors?
Debt Counsellors were formally introduced by the National Credit Act to help consumers who are having trouble with their debts. Debt Review Centre’s consultants will advise and recommend the best course of action of how to get out of debt. Debt Review Centre will negotiate with your credit providers on your behalf and design a manageable debt repayment plan that you can afford, so that you can take control of your finances and your future.
How long does it take to protect myself from my creditors?
After submitting your application form, the Debt Counsellors will send the notifications to all your creditors informing them that you have applied for Debt Review. You are immediately protected from your creditors taking legal action or harassing you for payment arrangements.
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What are the costs involved?
The fee structure for all registered Debt Counsellors are:
- The re-structuring fee commonly referred to, as the Debt Counsellor negotiation fee is a once-off payment, paid in month 1, equal to the first instalment that you make as per your re-structured payment plan. Maximum fee of R8,000 (single application) or R9,000 (dual application), whichever the lesser.
- After-care Fee (Commence in the second month of instalments)All payments throughout the debt review process are being monitored, the fee for this is: 5% of the monthly instalment of the debt repayment plan for the remaining period of the debt rearrangement plan.
- Rejection FeeShould the application be rejected a fee of R300 will be charged.
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Do I have to meet with the Debt Counsellors?
No all documents can be faxed or e-mailed, but all applications will be assessed by a registered Debt Counsellors.
For more information on the Debt Counselling Process, call us today!
How long will I be in the debt review program?
The actual debt review application must be completed within 60 (sixty) business days from date of application. The time period actually depends on the balance of outstanding debt and what you can afford to repay on these debts.
For more information on the Debt Review Process, contact us today!
What does it mean to be with debt review?
- You will be listed on the credit bureaus and therefore, you may not apply for new credit or continue using existing credit facilities for example a clothing account.
- No legal action may be taken against you whilst in the debt review program.
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Can I still apply for debt counselling after being summonsed / have judgements against me?
Yes, the summonsed account may not be included in your debt review as there is already legal action instituted on the said account. We will however negotiate a repayment installment with the relevant creditor, on your behalf.
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What happens if the credit provider declines our offer?
The application is presented to the Magistrate of the local Magistrates Court to grant an Order on the application.
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Will I be listed on Credit Bureaus?
Yes. After the application form is signed – all credit bureaus will be informed that you are in the debt review program. Once all the debt has been settled, we will issue a clearance certificate and your name will be removed from the NCR listing.
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Can I continue using my credit cards, accounts, etc?
No, you must stop using all credit facilities immediately. You may also not apply for any new credit agreements while in the Debt Review program.
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Can you cover all my debts?
We will include home loans, vehicle finance, credit cards, overdrafts, store cards, personal loans and micro-loans. We will then look at your monthly income and expenses and make a recommendation on the amount you can afford to pay each month.