Is Debt Review the Right Path? An Expert Opinion
Debt review is a powerful tool, but is it right for you? Our experts explain the process and its implications.
Debt review, also known as debt counselling, is a formal legal process in South Africa designed to help over-indebted consumers. It offers immediate legal protection from creditors and a structured path to repaying your debts. However, it is a serious legal commitment with long-term consequences, and it's crucial to get expert advice before proceeding.
What "Over-indebted" Legally Means
The National Credit Act (NCA) defines someone as over-indebted if they are unable to meet their debt repayments after covering essential living expenses. Our accredited debt counsellors perform a detailed financial assessment to make this legal determination.
How the Debt Review Process Works
At Dispute It, we partner with registered debt counsellors to offer this service. The process is complex and legally intensive.
Formal Application & Assessment: You apply through one of our partner debt counsellors, who performs a deep analysis of your finances.
Legal Notification to Creditors: If you are declared over-indebted, the debt counsellor sends a legal notice (Form 17.1) to all your creditors and the credit bureaus. This immediately places you under legal protection.
Debt Restructuring & Negotiation: The debt counsellor then formulates a new, affordable repayment plan. This involves intricate negotiations with each of your creditors to extend terms and lower payments. This is a specialized skill.
The Court Order: The restructured plan must be made an order of the court. Our legal team manages this application to ensure the plan is legally binding on all your creditors, giving you complete protection.
Managed Repayment: You make a single monthly payment to a Payment Distribution Agency (PDA), who then disburses the funds according to the court order.
The Clearance Certificate: Once the plan is complete, our team ensures you receive a Clearance Certificate and that the "Under Debt Review" flag is removed from your credit report, clearing your name.
The Pros and Cons: An Honest Assessment
Pros (Why it works):
- Immediate Legal Protection: Creditors must stop all legal action and harassment.
- Asset Protection: It prevents your home and car from being repossessed.
- Affordability: It provides a single, manageable monthly payment.
Cons (Why you need an expert):
- You Cannot Get New Credit: You are legally barred from getting any new credit while under debt review.
- It's a Long-Term Commitment: The process can take several years. Exiting it early is complex and requires a court application.
- It is a Legal Process: It involves court orders and legal declarations. It must be managed by a registered and reputable professional to be effective.
Debt review is a powerful solution, but it must be done correctly. Contact Dispute It for a professional assessment to determine if it is the right path for your specific situation.
The credit repair process is complex and requires specialist knowledge to ensure success. Don't risk handling it alone. Our experts at Dispute It are ready to manage your case and deliver results.