Debt review, also known as debt counselling, 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:
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.
When you cannot cope with your monthly debt repayments, not only is it a good idea to go under debt review in South Africa, 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!
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.
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
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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.
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.
The time you are in debt review is dependent on your debt amount and affordability. Typically, it ranges from 36 to 60 months.
Yes, but only under specific conditions, such as fully settling your debts or upon a court ruling.
When you are done with debt review, your debt counsellor will issue you with a clearance certificate and credit bureaus will remove the debt review flag from your credit report. You are now free to start applying for credit again!
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.
Read more about the criteria required and how you can be removed from the debt review process here.
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.
Find out more about the advantages and disadvantages of the debt review process here.
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).
The red flag for debt review refers to the warning that is placed on your credit report when you are in the debt review process. This flag is removed when you have successfully completed the process. The only reason it is temporarily in place is to let creditors know that you cannot access any further credit for the time being. This is in fact for your protection. You can't get rid of debt by creating more debt.
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!
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