Debt Review Explained

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For Winston, who is undergoing the process for the first time, understanding how debt review works is key. 

It’s a solution targeted at individuals or consumers like him, who have too much debt to their names and cannot maintain their debt obligations. 

It was introduced with the amended National Credit Act to ensure that consumers are guided ethically in terms of gaining financial wellbeing. Those undergoing the debt review process are protected by the NCA. Winston needs to know that only registered professionals can handle his case. 

As a part of the debt review process, a restructured debt repayment plan is created. The debt counsellors handling it all will undertake the task of negotiating with Winston’s creditors to try to secure a lower interest rate for him. Clients may not be contacted by creditors during this time. 

A budget will be created. He will be expected to stick to this budget every month. He will only be liable for making one payment every month, so he won’t have the hassle of having to keep up with multiple payments and having to remember to pay different interest rate amounts. 

To be eligible, Winston needs to be employed and earning a form of income. He will not be permitted to apply for additional credit while undergoing this process. 

Once all of Winston’s debts are paid off, a clearance certificate will be issued and sent to credit bureaux. This remains on his score for two years. This means that when Winston is ready to apply for credit again, he will have to keep in mind that this blemish on his record will affect the outcome of his application. Potential lenders will take this into account before granting him access to further credit.  

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