Debt review, also known as debt counselling, was created as a legal mechanism to provide over-indebted consumers with a mechanism for relief from the possibility of losing all their possessions as a result of debt collection enforcement action. The debt review process is governed by the National Credit Act of 2005, Section 86.
The objective of debt review is to provide over-indebted consumers with a mechanism to pay off their debts while at the same time preventing over-indebted consumers from acquiring more debt, which they cannot afford. Thus there are two major effects of debt review on the consumer:
- While under debt review, a consumer is protected against legal action being taken by creditors to attach the consumer’s assets, or to enforce the credit agreement by any other means. During this time the consumer is taken through a carefully laid out roadmap back toward financial stability.
- A consumer under debt review is prohibited from acquiring more credit and as such the fact that the consumer is under debt review has to be recorded and stored on the consumer’s credit records held by registered credit bureaux. This information remains on the consumer’s credit records until the debt review is completed.
In order for a consumer to go under debt review, that consumer needs to be declared over-indebted AND have a proven source of regular income. Once the consumer is declared over-indebted the debt counsellor notifies all creditors concerned as well as the various credit bureaux and commences the debt review application process as well as negotiations with the creditors concerned to reach agreement on a repayment plan. During this period the creditors are barred from pursuing legal enforcement action for the debts concerned.
Over-indebted consumers who wish to pursue debt review as a relief mechanism, need to bear in mind that it often entails making drastic lifestyle changes to get oneself back on the path of financial wellness. Acquired habits will have to be unlearned and the debt counsellor will have to play an important role in your life to help you bring about the desired changes in your financial circumstances.
Our debt review service is provided by registered National Credit Regulator Debt Counsellor 1488, Gunther Deutsch.
Should you wish to explore debt review for yourself please complete the form below.