Debt review or debt counseling is the process that attempts to restructure debt for over indebted clients. This process managed by a debt counselor proposes a lower monthly repayment which relieves the monthly payment pressure on the client. The process was introduced via the National Credit Act (NCA.)
The principal objective of debt review is to lower the monthly debt payments facing a client, prevent the client from being blacklisted or being placed under administration and ultimately to be free of debt within five years. Once the client is in debt review all legal action from creditors is placed on hold protecting the debtor from overly aggressive creditors.
Features of Debt Review
- Debt counselor restructures all the clients debt repayments.
- Client makes one debt payment per month to the Payment Distribution Agency who pays client’s creditors.
- Ultimate aim is to be debt free within 5 years.
Advantages of Debt Review
- Obtain relief from creditors who are demanding payment.
- Protect assets from being attached and sold in execution.
- One monthly debt repayment .
Disadvantages of Debt Review
- The debt counselor takes a monthly fee which needs to be costed for.
- The client often ends up paying more for the debt as the term of the debt is often extended as monthly debt repayments are lowered.
How to Apply for Debt Review
- All consumers have the right to apply for debt counseling.
- If you are rejected for debt review or debt counseling, you have the right to be provided with reasons why you were rejected.
- Only use the services of a registered debt counselor.