Debt Counselling as a service was created to assist individuals with excessive amounts of debt in 2007 within the National Credit Act (NCA), and the objective of Debt Counselling South Africa is to supply a risk-free approach to people that are over indebted that can not pay all their financial obligations. Debt Review is a very successful substitute for conventional alternatives like Administration and Sequestration when confronted with debt and over indebted consumers. To answer your question: What is Debt Review? Debt Counselling has the well-being of consumers at heart and consequently offers the intent of rehabilitating people and then reintroducing them back into the financial market.
There are some Debt Counselling pros and cons you should be aware off before considering to hand over your financial responsibilities to Debt Review Specialists:
Advantages of Debt Review
- One of the major benefits is that debt counsellors can, negotiate with the customers’ creditors to restructure an affordable repayment amount.
- Through this course of action, the credit bureaus are informed by the debt counsellors that the client has requested debt review, and the customer’s profile will be updated as a result, as opposed to lenders chasing with summons and judgments, which can negatively affect the customer’s credit rating.
- You will be unable to get more credit as well as use your credit facilities, which means you will not go further into debt.
- You only have to make one monthly payment, and you will never pay more money than you can reasonably afford.
- No legal action can begin once the application for Debt Review has started.
- Creditors will stop bombarding you with phone calls demanding immediate payment.
- The Once-off Debt Counselling Professional fee is included within your first instalment, meaning you do not have to pay the Debt Counsellor upfront, with the risk of Credit Providers taking legal action.
Disadvantages of Debt Counselling
- It usually involves reducing your monthly payments on your debts; it will take longer for you to settle the amount you owe and you will pay more interest as well.
- Don’t think of debt counselling as an easy way out – it is a complicated process that demands commitment and sacrifice from you.
- You cannot get more credit, and you will not be able to make further use of your current credit facilities.
- Almost all debt counselling applications result in having to go to court to get a consent order for the new contract (it is rarely required of the consumer to go to court).
- Any account where legal action has been taken before a client approaches debt counsellors, cannot be included under debt review.