How to Solve Financial Problems Through Debt Review
Millions of South Africans are struggling to stay financially afloat as the result of salary cuts and compulsory limitations on business operations during the lockdown period. If you also struggle to pay creditors on time and have to juggle between your credit cards and bank accounts to make the necessary payments, you may want to consider debt review as a solution.
When to Consider It
If you have a monthly income but cannot pay the creditors and still have enough funds left to pay the basic living expenses, then you can qualify. You do not need assets and securities, but a monthly income is important.
How It Works
The counsellor analyses your financial state to determine whether it is possible to cut expenses to ensure you can make monthly payments to the creditors. If you are already at the limit of your budget and do not have enough funds left to pay for the minimum basic costs, you qualify for the debt review. The counsellor negotiates with the creditors for better interest rates. If the court approves, all the credit accounts that qualify are included in the process.
You pay a single monthly instalment over an agreed period. A distribution firm handles the distribution of the appropriate instalments to each creditor according to the court order. Once all the amounts have been paid, your counsellor provides you with a clearance certificate that serves as proof that you no longer owe money to any of the creditors included in the review process.
Advantages of The Process
Although you are not able to enter any credit agreements during the period, you benefit from a more affordable single monthly instalment. With it not being possible to get credit during the period, you pay cash for goods, thereby breaking the debt cycle. Lowered interest rates also help to make the instalment affordable. Once you are under debt review, creditors cannot harass you or take any legal steps against you.
It is imperative to make the monthly instalments, as late or non-payments provide sufficient grounds for cancellation of the process by the creditors. Affordability and the chance to regain financial strength without constantly having to deal with creditors and debt collectors are the main advantages.
You do not lose assets in the process. Once the debt certificate has been issued, you can enter credit agreements. Indeed, your credit record will show on-time payments of the accounts for the period. As such, you also get the opportunity to improve your credit score.
You have a registered debt counsellor that handles the negotiation. You do not have to appear in court or deal with the creditors. The counsellor helps to ensure you are left with sufficient disposable income to pay for your living expenses during the period.
Once the process has been completed, the debt review flag is removed from your credit record. You thus gain a clean credit record, giving you a fresh start.
Where to Get More Information
Use our online enquiry form for financial analysis help to determine whether debt review is a suitable solution to your financial problems.