Debt review? Know your rights!
By Katharine Liese, Marketing Lead at 1Life
Debt review is a process you can apply for to a debt counsellor if you have too much debt and are struggling to repay your debt. If your application for debt review is accepted, a debt counsellor will negotiate a payment plan with your creditors. This means that you can pay less each month, but for a longer time. Debt counsellors may also negotiate lower interest rates for your debt. The lower payments mean you can pay off your debt and still pay your monthly living expenses such as food and transport.
Debt review can really help you if you are in too much debt. At the end of the process, not only will you have paid your debts, you will also have a clear credit record.
Debt review is subject to certain rules and regulations. These are set out in the National Credit Act. We’ve simplified these into 10 important points, so that you know what your rights and responsibilities are if you are under debt review.
1. Check that your debt counsellor is registered with the National Credit Regulator. Ask them for their registration certificate or check the Regulator’s website.
2. Tell the debt counsellor all the details of your debt including how much it is, how much you have repaid and what the interest rate is. Send your statements to your debt counsellor.
3. Tell the debt counsellor details of your income and expenses. The purpose of debt review is to give you an affordable debt repayment plan. So, your debt counsellor needs to know how much you need to live on and how much you can afford to repay your debts each month.
4. Your debt counsellor will review your application, assess your debt and apply for approval for debt review from the Magistrate’s court. If your application is rejected, you can ask to see the reasons why it was rejected.
5. Make sure you know and understand your payment plan – how much you must pay, when and for how long. Your debt counsellor will draw this up and must explain it to you. Ask if there is anything you don’t understand or need a translator to help you understand.
6. Your debt counsellor must tell you what they charge and how these fees are paid.
7. Make your monthly payments on time and make sure you get statements showing where the money is going and how your debt is reducing.
8. You cannot take out any more debt when you are under debt review, so don’t apply for credit or accept any more credit.
9. When you are under debt review your creditors cannot call you or harass you or ask for extra payments. If they do contact you, tell your debt counsellor or contact the National Credit Regulator.
10. Get a clearance certificate from your debt counsellor when you have paid off your debt. This certificate shows that you have a clear credit record with no blacklisting.
Get out of debt
Debt review can be very helpful if you have run into trouble with debt. Just make sure that you stick to the rules and know your rights and responsibilities when under debt review. If you do, you may find yourself in that happy situation of being debt free.
What happens if you don’t stick to your payment plan?
It’s important to stick to your payment plan, but there may be a situation where you just can’t – for instance, if you lose your job. If that happens, speak to your debt counsellor:
1. Tell your debt counsellor if your circumstances have changed, for instance, you were retrenched or took a job at a lower salary.
2. Your debt counsellor can help you complete the required forms so your creditors will know that you are having difficulties and cannot make payments.
3. Come up with a plan on how you can repay the debt.
4. Your creditors will review this and can either continue with lower repayments or take another course of action such as instituting legal proceedings.
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