DEBT REVIEW IN SOUTH AFRICA | HOW TO GET OUT OF DEBT!Debt Review in South Africa is a debt relief solution overseen by the National Credit Regulator. The National Credit Act provides the solution to assist individuals struggling with debt in South Africa. The Debt Review Process helps people get out of debt without losing their assets.
Why is Debt Review in South Africa necessary?
The great question is:
The key question is: What factors contribute to the overwhelming debt South Africans endure, and what prompted the passage of a new credit act that includes a debt relief solution like Debt Review in South Africa?
Finding the answers:
Let's look at what the media has to say about South Africans who are overindebted and the reasons behind this. We might be lucky enough to find an answer to this burning question.
What’s the media saying about South Africans and Over-indebtedness?The Mail & Guardian
In 2023, the
Mail and Guardian released an article published an article claiming that individuals are spiraling into debt due to a lack of sufficient income.
Standard Bank
In October 2024, Standard Bank, in their wisdom,
declared in a recent article that South Africans are struggling financially because they live beyond their means. A bit presumptuous, I would say. The one thing they did say that is quite concerning is that over 400,000 South Africans have less than a thousand rand (R1000.00) left in their bank account at the end of the month.
How to explain the level of financial distress people are experiencing in South Africa:
Consider that both inflation and interest rates increased substantially. This had a significant impact on the issue of over-indebtedness in South Africa. Indeed, the impact of the COVID pandemic persists to this day. Smaller companies are unable to absorb salary increases, and as fuel prices rise, the cost of basic necessities such as food and groceries also increases. Food prices do not decrease in tandem with fuel prices. I believe Standard Bank should consider all these factors before making such a bold statement.
How can Debt Review in South Africa help over-indebted South Africans?
The
National Credit Act includes the Debt Review Process as a solution to help over-indebted South Africans in achieving financial freedom. This is a countermeasure to help fellow South Africans service the debts they currently have with one consolidated monthly instalment, calculated and based on their affordability, and not get drawn into further debts due to not being able to survive monthly. However, this approach is not without its challenges. During the debt review process in South Africa, you will not be able to take on any new debts. However, it also stops all legal collection proceedings against anyone under debt review. Additionally, if you're under debt review in South Africa, you will not lose any of your assets.
How does the Debt Review process in South Africa work?
Your possessions are safe from the sheriff and debt collectors. You will not lose your financed vehicle, home (bonded or not), or any other assets if you decide to continue with Debt Review in South Africa.
What is the Cost of Debt Review in South Africa?
In South Africa, we calculate the cost of a debt review application based on your affordability and do not require upfront payment. The debt counselor will conduct the evaluation and then provide you with Form 16 to sign. Once you sign it, the distribution company will deduct the debt counseling fees and disbursements from your first and second monthly installments, based on your reduced consolidated monthly repayment. The distribution company will allocate all subsequent monthly instalments towards the debt repayment once the debt counsellor fees and disbursements are paid in full. Payments will continue until the debt is settled.
Where to start:
How do I go about finding out about the debt review process in South Africa?
The Debt Review Process in 10 x easy steps: Step 1:
The greatest question is, where and how to find a reputable debt counsellor. The internet is filled with scammers, not to speak of social media. How can I locate someone who can assist me and offer a personalised service? For your convenience, we've included a few things you can do to ensure that you find a reputable debt counselor.
What is the trademark of a reputable Debt Counsellor?• A reputable debt counsellor is somebody that’s
registered at the National Credit Regulator (NCR).
• The debt counsellor must
have a proven track record. Unfortunately, it is true that to be registered at the NCR doesn’t necessarily mean that the debt counsellor is reputable. Do your research, before making any enquiry.
• A Debt Counsellor that cares about his/her clients and will do his utmost best to ensure the success of the Debt Counselling process.
• It will be somebody that will be able to assist you in all aspects of Debt Counselling and will be able to provide alternative debt relief solution services as well as debt counselling to ensure that his client gets the best possible solution available in South African Law for their financial situation.
• If you encounter a Debt Counsellor that can guarantee you that you will not be blacklisted for only enquiring about the process, that is a reputable debt counsellor.
Step 2:
Now that you’ve found a
reputable Debt Counsellor to help you with your financial evaluation the next step would be to provide him with the following information:
1. Latest payslip.
2. Basic monthly expenses prior to paying your debt.
3. Copy of your South African Identity document.
4. If you’re married in community of property, we will also need the same documentation for your wife.
Step 3:
Now the debt counsellor will complete your information on the system and then request permission via sms to access your credit profile. Once you’ve granted him access to your credit profile, this information will be pulled in on the system to do the evaluation.
Step 4:
The Debt Counsellor will then go through the list of creditors listed on the credit profile with you and if there’s any creditor not listed on the credit profile, he will add it manually, to ensure that all the debts are listed on system prior to finalising the Debt Review Evaluation.
Step 5:
The Debt Counsellor will now continue to add all your monthly expenses (budget) on the system before getting a report with a consolidated monthly instalment which will include the Debt Counsellor fees and disbursement as per your affordability.
Step 6:
The Debt Counsellor will provide you with his recommendation and will inform you of your monthly savings should you continue with the Debt Review Process in South Africa.
Step 7:
If you wish to continue or not you will receive a FORM 16. This is basically your quotation. By signing this document, you grant permission to the Debt Counsellor to continue with the Debt Counselling process. This is also done by either email or sms with a link. You can sign this electronically without printing it.
Step 8:
Once you’ve signed the FORM 16 the Debt Counsellor will start with the negotiations to decrease your debt and monthly instalments to the amount that you can afford in terms of the proposed amount that you signed for on the FORM 16. It will now be listed on your credit profile that you’re busy with the debt review process in South Africa and will be prohibited from acquiring any debt whilst listed as being over-indebted.
Step 9:
Once the debt counsellor receives acceptance letters for the proposed decreased monthly instalments, he will continue to submit the relevant documentation to an attorney that will then act on your behalf and bring the application for Debt Review in South Africa.
Step 10
Once the court order is granted, you’re officially under debt review and can the listing on your credit profile can only be removed once the debt has been settled with the assistance of the Debt Counsellor of record.
In conclusion:
Debt Review in South Africa is a debt relief solution monitored by the National Credit Regulator and when dealt with in a professional manner can be to the advantage of any person(s) struggling to service their debts.
Stops all legal collection processes:
It stops all legal action and help you to pay your debt in affordable monthly instalments with a lower interest rate and lower monthly repayment plan. In many instances interest rates can be written off completely, although it is not allowed in terms of the National Credit Act, it has been done in the past.
Financial Rehabilitation after Debt Review
To ensure the success of the application you will need a reputable debt counsellor that will work with you toward financial rehabilitation after the debt review. This will ensure that the debt will be settled sooner rather than later and that you will be able to start living a debt free life as soon as humanly possible.
