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The Nature and Benefits of a Debt Review

 

When one is attempting to find a solution to any problem, the logical first step should always be to conduct a preliminary in-depth analysis of the situation. For example, a doctor will want to carry out a full physical examination and run a few lab tests before committing to a final diagnosis and prescribing a suitable course of treatment. Similarly, a financial consultant will need to conduct a debt review before they will be in a position to assist someone who may be experiencing financial problems.

In their younger years, the more elderly citizens of South Africa would have had very little access to credit and typically saved up to pay for costlier items like furniture. Indebtedness has since become a way of life. Few people would own a home or a car without a loan from a bank, building society or finance company. However, while some are careful to limit their borrowing, others are less cautious and even responsible borrowers can find themselves in need of a debt review purely because of some unexpected change in their personal circumstances. The loss of a job, a crippling divorce settlement, or the sudden death of an uninsured spouse can all leave a model citizen faced with bankruptcy and at the mercy of the bailiffs.

Whether through mismanagement or misfortune, should your financial liabilities exceed your capacity to honour them, it’s time to take action! Sadly, too many debtors fail to do so and instead just hope that, in time, their problems will somehow resolve themselves. Arranging a debt review is a simple and painless process and, with a little help from a specialised debt counsellor, it could soon put an end to all of those sleepless nights and the sheer panic that erupts each time the phone rings.

First, the consultant requires details of your income, your fixed liabilities, plus how much you owe and to whom. The next step will be for them to open negotiations with each of your creditors on your behalf. While creditors are free to resort to legal action to recover a debt, the process can be lengthy and may still fail to produce results if the debtor has insufficient assets. The debt review process offers a debtor the means to repay the amounts owed but on terms that are more manageable while each of the creditors will receive an acceptable sum in settlement.

Once you have completed the necessary application form, your bank will be informed that you are under debt review and release details of your account balances. Both the credit bureau and your creditors will also be told and, after negotiating with the latter, your counsellor will present you with a proposed repayment plan. If it is acceptable to you, your repayments will then be restructured and the relevant, revised debit orders implemented.

Providing you adhere strictly to the terms of the new plan, your outstanding accounts will eventually be settled, at which time, the debt review process will conclude with the issue of a clearance certificate.

Providing you adhere strictly to the terms of the new plan, your outstanding accounts will eventually be settled, at which time, the debt review process will conclude with the issue of a clearance certificate.