What is debt review in South Africa?
Before determining if you qualify for debt review in South Africa, it would be useful to ensure that you properly understand the debt review process.
Debt review, also referred to as debt counselling, is a legal process that helps over-indebted South Africans manage their debt repayments and become debt free. The process was introduced by The National Credit Act and the entire process-including the fees-is regulated by the National Credit Regulator (NCR).
How does the debt counselling process work?
Once you've applied for the debt counselling process, a Debt Counsellor will be appointed to your case. The Debt Counsellor will then conduct a financial assessment on you to determine whether or not you are over-indebted. They will do this by looking at your income and expenses.
Once they have determined that you are over-indebted, they will work out a new repayment plan for you that is affordable. We accomplish this by negotiating with your creditors on your behalf to reduce the interest rates on your loans. When you are under debt review, a court order regarding your repayment plan is put in place. This then gives you protection against legal action which means that your home and your car are protected from repossession.
Did you know: when you're a client at Meerkat, we can save you up to 50% on your monthly debt repayment!
Who qualifies for debt review?
To qualify for debt review you have to be:
- Employed
- Debt that is equal to or more than R50 000
- Must be over-indebted (struggling to make your debt repayments)
Read: How do you know if you're over-indebted?
How much does the debt review process cost?
Because the cost of debt review will be dependent on the amount of debt you have and how long you will be in the process for, there is no one debt review fee that is applicable to everyone. What is worth noting, however, is that the debt review fees are all regulated by The National Credit Regulator. This means that there are maximum caps involved with what a debt counselling company can charge you.
It's also very important that you ensure that the debt counselling company you want to partner with is partnered with a reputable Payment Distribution Agency (PDA). This is because the PDA will be responsible for managing the payments of your debt. It's also crucial that you know that you will never be paying a Debt Counsellor directly. Payment should be made to the PDA who will then distribute your payments to your creditors and debt counselling company.
Is it wise to join debt review?
Joining debt review would be a very wise decision if you are currently struggling to pay for all your debt. After you have successfully completed the debt review process, you will be awarded with a debt review clearance certificate. This will indicate to credit bureaus that you have successfully completed the process, and as such, the debt review flag that was on your credit report, will be removed.
Did you know: after successfully completing the process, you will be in a better position to apply for loans because your credit score would have improved during the process.
Can debt review be declined?
You may not qualify for the process if you are not found to be over-indebted or if you are currently not earning an income.
What is the disadvantage of debt review?
A common disadvantage noted about the process is that you can no longer apply for credit while under debt review. What's important to note is that even if you were not in debt review, and you had poor affordability and a poor credit score, you probably would not have been approved for the loan anyway.
Also, you will only TEMPORARILY not be able to take out more credit. Once you have completed the process, you will not only be able to apply for credit, but you'll be in a better position to do so!
Who is Meerkat?
MyMeerkat FSP is an authorised financial services provider (FSP 50979). We are a registered Debt Counsellor NCRDC 2613 and we've been voted as the Top 10 Large Debt Counsellor in the country!
![DRA 2023 Top 10 - email - Large[2305843009242846645]](https://www.meerkat.co.za/hs-fs/hubfs/DRA%202023%20Top%2010%20-%20email%20-%20Large%5B2305843009242846645%5D.png?width=367&height=164&name=DRA%202023%20Top%2010%20-%20email%20-%20Large%5B2305843009242846645%5D.png)
