Frequently Asked Questions
What is Debt Review?
Debt review is a legal process in South Africa designed to assist over-indebted consumers in managing their debt. It involves a registered debt counselor who assesses your financial situation and helps you restructure your debt payments to make them more manageable.
How do I know if I'm over-indebted?
You may be considered over-indebted if you are unable to meet your monthly debt obligations without sacrificing basic living expenses. Indicators include missed payments, relying on credit for necessities, or feeling overwhelmed by debt.
What is the process of Debt Review?
The process typically involves:
- Assessment: A debt counsellor evaluates your financial situation.
- Proposal: The counsellor creates a debt repayment plan and negotiates with creditors.
- Payment Plan: You make reduced payments to your creditors through the debt counsellor.
- Completion: Once debts are settled, you receive a clearance certificate.
Will Debt Review affect my credit score?
Yes, entering debt review will reflect on your credit report and may affect your credit score. However, it can also help you improve your score over time by ensuring you meet your restructured payment obligations.
How long does Debt Review last?
The duration can vary based on your financial situation and the amount of debt you have. Generally, it lasts until your debts are settled, which can take several months to a few years.
Can I apply for credit while under Debt Review?
No, you cannot apply for new credit while under debt review. Your debt counselor will inform creditors of your status, and they are legally required to decline your applications.
Can I exit Debt Review?
Yes, you can exit debt review at any time, but it’s important to understand the implications. Exiting can lead to creditors pursuing you for outstanding debts.
What happens if I miss a payment during Debt Review?
Missing a payment can jeopardize your debt review status. It’s crucial to communicate with your debt counselor if you foresee any difficulties in making payments.