Have you ever wondered about applying for Debt Review, but have questions that are keeping you back? In this article, Karin of Cape Debt Clinic answers the five most common questions received by debt counselors. Her hope is that you will be motivated to make the right decision regarding debt review, to move you out of over-indebtedness towards a debt-free future.
1) How long will debt review take?
While there is a guideline in the National Credit Act, providing consumers relief for a maximum period of 5 years, this may be shorter, as you increase your payments when finances improve.
2) How much will debt review cost?
Fees are applicable and again the guidelines in the NCA are applicable. Debt Review Practitioners are professionals and perform a number of duties for which you will pay an initial fee (relative to your monthly rehabilitation amount) as well as an ongoing fee of 5% per month. Other fees are also payable to the Payment Distribution Agent. Your monthly payment is made directly to them and they distribute your payments to creditors and keep you updated via statements and balances are kept by them. PDA fees are vary, depending on your creditor payments.
3) How does it affect my job prospects and other agreements?
Your credit report will be updated by the National Credit Regulator via the DebtHelp system. You are entitled to apply for a school or a Lease agreement. Bear in mind that your budget will determine what provision has been made for property rental and school fees.
4) How do I get out of debt review?
The Act made provision for debt rehabilitation under certain conditions and the guidelines clearly state that the debt counsellor of record must issue the clearance certificate. This may only be done when all debt is settled in full.
5) What if I stop making payments whilst under debt review?
You will obtain a Debt Review Court Order early on in the process. Your agreement is to repay the debt with that minimum amount. Should you fail to pay (with no valid reason), the creditors will be entitled to terminate the agreement, the debt counsellor will be forced to issue a withdrawal notice and in cases like this the consumer is left to deal with a situation which is often much worse than before entering debt review. Don’t skip payments. Debt Review is rehabilitation from old habits with new, healthy financial habits with the eventual outcome of being debt-free.
We hope that some of the questions you had about the debt review process were answered in this article. If you would like to further discuss this or find out whether debt review is right for you, contact us here – we will be happy to hear from you.