Debt review is a legal process introduced by the National Credit Act (NCA) to assist South Africans who are struggling to cope with their debt repayments. Its primary goal is to restructure your debt repayment plan so you can afford monthly installments without missing any payments.
When you are under debt review:
- A debt counsellor assesses your financial situation.
- An affordable repayment plan is negotiated with your creditors. You can save up to 50% on your monthly debt repayment.
- You gain protection from legal action by creditors as long as you adhere to the new repayment terms.
In this blog post we'll unpack the truth about debt review, debt review pros and cons, what it means to be under debt review any consequences of the debt counselling process.
Is it a good idea to go under debt review?
Not only is it a good idea to go under debt review when you cannot cope with your monthly debt repayments, it's actually the best idea for you. Debt review, when done with a registered NCR debt review company, is a legal, proven way to get out of debt and get back on track with your finances!
What happens when you are in debt review?
When you go into debt review, it means you've applied for debt review and a registered Debt Counsellor has worked through your income and expenses and has determined that you are over-indebted. In short, when you are in debt review it means a Debt Counsellor has worked out a repayment plan for you to help you manage repaying your debts.
How does debt review work?
Understanding the steps involved in debt review can help demystify the process:
- Assessment: A debt counsellor evaluates your income, expenses, and debts to determine if you qualify for debt review.
- Proposal: The counsellor drafts a repayment plan based on your affordability.
- Negotiation: The repayment plan is shared with your creditors for approval.
- Court Approval: Once creditors agree, the plan is formalised through a court order.
- Repayment: You make a single monthly payment to a Payment Distribution Agency (PDA), which distributes funds to creditors.
- Clearance: Upon settling all debts, you receive a clearance certificate and are no longer under debt review.
Read this blog post about how The Dlomo family saved R23 000 on their monthly debt repayment thanks to Meerkat!
Watch this video with Founder & CEO of Meerkat, David O'Brien as he discusses the process
▶︎ Read more about Debt review: Everything you need to know.
Benefits of debt review
- Protection from Creditors: Creditors cannot seize your assets or initiate legal proceedings if you are under debt review.
- Lower Repayments: Monthly payments are reduced to align with your affordability.
- .Asset Protection: Your home and car are safeguarded, provided you stick to the payment plan.
- Stress Reduction: Simplifies debt management by consolidating payments.
- Clearance: You get a clearance certificate and a clean credit slate, putting you in a stronger position to apply for credit at the end of it.
Common Myths About Debt Review
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Myth: Debt review means you are blacklisted.
Truth: Debt review does NOT mean you are blacklisted. There is no such thing as being blacklisted. This can just refer to any negative information on your credit report. While there is a warning that is placed on your credit report when you are under debt review, this is temporary and does not mean you are blacklisted. It just means that you temporarily won't have access to credit.
Read this blog post about being blacklisted. -
Myth: You’ll lose your assets under debt review.
Truth: The process is designed to protect your assets as long as you comply with the repayment plan.
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Myth: Debt review is the same as bankruptcy.
Truth: Unlike bankruptcy, debt review allows you to settle your debts in full over time, avoiding the severe consequences of insolvency.
Frequently Asked Questions
1. How long does debt review last?
The time you are in debt review is dependent on your debt amount and affordability. Typically, it ranges from 36 to 60 months.
2. Can I exit debt review before completing it?
Yes, but only under specific conditions, such as fully settling your debts or upon a court ruling.
3. What happens after debt review?
Once all debts are settled, you’ll receive a clearance certificate, and your credit profile will reflect a clean slate.
4. How much does it cost to remove a debt review?
If you have successfully completed the debt review process and paid up all your debt, it will cost you R1150 to remove a debt review.
If you meet these requirements, you can start your online application here.
5. What are the disadvantages of debt review?
A common disadvantage cited of the debt review process is that when you are in the debt review process, you will not be able to borrow money (take out loans or use credit).
What's important to note about this is that it is only temporary. Once you've successfully completed the process, you will be able to apply for credit again. And, if you are already struggling to pay your debt and you've missed some of your debt repayments, you may not be approved for further credit.
Your best chance at improving your chances of securing credit in the future is to go under debt review.
6. How do I qualify for debt review?
To qualify for debt review, you must be earning an income and be considered to be over-indebted (struggling to pay your monthly debt repayments).
How Meerkat Can Help
At Meerkat, we’re dedicated to helping you take charge of your financial future. Our expert debt counsellors work with you to create a manageable repayment plan, ensuring you can meet your obligations without sacrificing your well-being. Contact us today to start your journey to financial freedom.
We've also been voted as one of the Top 5 Debt Counselling Practices in South Africa!
Leave your details and we’ll give you a call back to discuss how we can help.