In our previous post, we helped you understand Debt Review a bit more. In this post we're going to show you the debt review process.
1. Find a debt counsellor
It is important to not use the services of just any person offering to help you with your debt. To get the full protection of the NCA and to protect you against fraudsters, only use a debt counsellor that is registered with the National Credit Regulator (NCR). These debt counsellors are specifically trained, verified and approved by the NCR. You can verify whether it is a registered debt counsellor by checking their registration certificate. The certificate should have the NCR logo on it and should display the debt counsellors details, as well as their registration number. You can also search for a registered debt counsellor on the NCR’s website.
2. Give your information to the debt counsellor.
The debt counsellor will need the information below to best assist you in setting up a repayment plan
- ID document
- Details of your required monthly repayments
- Monthly budget of other expenses such as food, petrol and school fees
3. The debt counsellor will then calculate whether you are over-indebted.
Essentially, they will determine whether your debt repayments are unaffordable, taking in to account your current income.
4. Application and Fees
If the debt counsellor confirms that you are over indebted, you will then be able to officially apply for debt counselling. It is very important that the debt counsellor explains all the applicable fees to you at this stage and that you make sure you fully understand them.
5. Crunching some numbers
The debt counsellor will take the information you provided and do some calculations. He will calculate how much money you need for living expenses and what you can afford to repay every month.
6. Getting listed
The debt counsellor will contact the credit bureaus and inform them of the fact that you are under debt review. They will then list you as such to ensure your full protection. This is not like being blacklisted. Once you have repaid all your creditors, your name will be removed from this list.
7. Negotiating with creditors
The debt counsellor will contact all your credit providers to ensure that the information provided is accurate and to make double sure of the amount that you owe them.
This is NOT like a blacklisting – it’s a protection. It will be removed completely once you’ve paid everything off.
If all the credit providers agree with the repayment proposals offered by the debt counsellor, a legal ‘consent order’ will be obtained. (Often, this could mean a reduction in fees and interest payable by the consumer.)
This means that the terms have been agreed to and can’t be changed independently by any of the credit providers.
Should one or more of the credit providers not like the terms, the debt counsellor will have to approach a magistrate with the proposed debt repayments to get a decision. As long as the repayment plan is reasonable, the court will it will most likely approved it.
8. Reaching an agreement
Once an agreement has been reached, the debt counsellor will give you your final repayment plan and also submit it to a Payment Distribution Agency.
This agency will take a lump sum from you each month and split it up between the credit providers, according to the repayment plan.
Your obligation is to keep up the monthly payments until such time as the whole amount has been paid off.
We trust this has helped you to understand the process ahead if you are considering Debt Reviewing. As we mentioned in our previous post, here are a couple of companies compared on Fincheck for you to apply to: