Debt Review strategy & Why You Need a Clear Plan.

Getting out of debt is difficult, but not impossible, but you need a debt review strategy!

The first step in the debt review application process is an income and expenditure assessment. Your debt counsellor would need to see your payslip or bank statement showing proof of income to establish the Debt Review Strategy. You also need to show your ID document; your contractual obligations; and the breakdown of your budget.

Debt Review strategy – 60 days

It takes up to 60 business days to finalise a debt review payment proposal. Your debt counsellor will then obtain the certificate of balance from all your creditors. The debt counsellor will then determine if you are over-indebted or not.

If you are over-indebted, the debt counsellor will negotiate with your creditors to restructure a new repayment plan. This includes comprising reduced interest rates, extended terms, and smaller monthly repayments. At the same time, it will ensure you have enough to cover your essential living expenses.

Your debt counsellor will have to approach a magistrate’s court to get a court order if your creditors decline. If your application is not finalised within the legally stipulated timeframe, and your credit agreements are in arrears, your creditors are entitled to terminate the debt review, after which time legal action can be taken against you.

Participation in good faith by all stakeholders is crucial to the successful outcome of a debt review. This is why it is so important you choose a reputable debt counselling firm to work with from the outset.

If all goes according to plan

If all your creditors agree with the new payment proposals offered by your debt counsellor, a legal consent order will be obtained. They have then agreed to the new payment terms and cannot be unilaterally changed. You will then start repaying all your creditors via one single, affordable transaction per month.

Provided you don’t fall into arrears with your repayment plan obligations, you will have the legal protection of your assets during the repayment period, which is generally five years.

If you are able to pay in extra to your agreed repayment plan, you will be able to settle the loan in a shorter period, which will not only save you the interest you’d otherwise have paid over the full term of the loan, but it’ll also increase your credit rating.

A clear exit strategy

For the duration of your repayment plan, your profile with the credit bureaus will be flagged to say you are “under debt review”. This means that no creditor may grant you credit up until that flag has been removed. When you have settled your debt in full and can demonstrate that you now have the ability to satisfy future financial obligations. Then your debt counsellor issues you with a debt review clearance certificate.

The debt counsellor will also notify your creditors and the credit bureaus that you are no longer “under debt review”. The credit bureaus will then white-flag your profile.

Also, read why it takes so long to pay off a credit card.

Content and post-credits

If you need any further info or with to talk to a debt counsellor, then simply complete the callback request form here.