Knowing the origin and background story behind debt review can help you understand if it is the right path for you. Beneath its history, you’ll discover the government’s intent for conceiving this process in the first place.
Debt review helps South African consumers get out of monetary troubles. It also gives debt counsellors strict standards to follow, ensuring ethical methods of assisting consumers reclaim their financial well-being.
Here’s an in-depth look at what started this debt solution:
Debt is not a bad thing until it starts to pile up. Most South Africans are low-income earners and rely heavily on credit to address their basic needs. With the rising cost of living, their debt piles up fast, resulting in an enormous number of over-indebted consumers.
Before the National Credit Act took effect, South Africans did not have the right to ask creditors to explain their terms and conditions. This gave creditors the upper hand in any credit or loan application using complex jargon.
Previous laws made debt a growing burden. The Usury Act (73 of 1968) and the Credit Agreements Act (75 of 1980) did not protect consumers from unethical lending practices.
The National Credit Act (NCA) replaced both the Usury and Credit Agreements Acts in June 2007. NCA aims to empower consumers in the credit market and seeks to achieve the following goals:
The rising number of unsecured debts in South Africa these days are proof of the necessity of the NCA for consumers. Increased personal loans, store cards, and overdrafts are growing each year. Some creditors are now taking more risks and lending more money without the necessary collateral backing.
Debt review is a rehabilitation program that seeks to help consumers who are deep in debt. It allows consumers to take control of their finances by reducing what is owed each month to make repaying their debt as easy as possible.
Having said that, debt review is not a means to offer financial support to someone’s lavish lifestyle. It’s for those who genuinely need assistance in making ends meet. The purpose of debt review includes the following:
A National Credit Regulator (NCR)-registered debt counsellor can help you with the legal processes required for a debt review application.
Here’s a summary of the current process:
After completing your payments, your credit record will no longer reflect that you went through debt counselling. However, judgments against you will remain on record for five years.
If you’re struggling with your finances because of debt, consider debt counselling. Take advantage of the opportunity the government created to help you live a debt-free life by checking to see if you qualify for debt review.
Find out if you’re eligible to reduce your debt and protect your belongings.
Disclaimer: This website and any information herein is not intended to be, nor does it constitute, financial, tax, legal, investment, credit, or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified professional directly.