Since the National Credit Act was introduced in 2007, people have asked: is going under debt review a good idea?
There is no doubt that debt review is very beneficial for over-indebted consumers. Nevertheless, as with anything in life, there are advantages and disadvantages. Which means that debt review might be a great idea for some South Africans, and it could be a bad idea for others.
Debt review is one of the best solutions available for over-indebted South Africans, but is it a good idea for you? In this post, we’ll take a look at a few things that you should consider before making your decision.
On average, the debt review process takes about 3-5 years, but ultimately it all depends on the amount of debt owed, the arrangements to pay it off and what you can afford. Therefore, it is dependent on a few factors – some you may not even see yet.
If you qualify, and decide to apply for debt review, then you are taking a stand against your debt and making a firm decision to change your identity to become a debt-free person.
You have to complete the debt review process to be declared over-indebted and get your clearance certificate. Moreover, you’ll have to make your debt repayment each month.
Missing payments or quitting halfway through can have consequences, so be clear on your decision before you commit.
Now, if you can safely say that you are committed to the process and genuinely care for the benefits that the process offers, then there are two more things that you should consider before going under debt review:
As someone who is debt-free (or will soon be), you’ll need to overcome your reliance on credit, which can be very difficult for some South Africans. With this in mind, while under debt review, you won’t have access to additional credit, which means that you won’t be able to make more debt.
It is fairly obvious why this is beneficial, but nevertheless, it is something that you should consider when deciding whether debt review is a good option for you.
There are a few regulated fees associated with the service. Always look at the bigger picture when deciding what to do. But in the long run, these are insignificant trade-offs.
Debt review fees are essential to ensure that the entire process remains sustainable, and that is why the NCR structured the process in this way.
It is worth noting that the fees are “built-in”, which makes it more affordable, and because the fees are regulated, you can rest assured that you are not being cheated with the cost.
Consider if you are prepared to pay a small fee to get a team of professionals on your side.
So far we’ve covered when debt review might not be a good idea. Now, we’ll take a look at the other side and examine when debt review could be a great idea.
Debt review could be the ideal solution if you are:
Let’s take a closer look at each of these points, and why debt review is considered a good idea for South Africans that are dealing with the challenges listed above.
Take a look at some of the benefits that make debt review a good idea. In some cases, debt review can be a valuable life-line, and the difference between financial ruin and salvation. Of course, it is up to you to assess the benefits for yourself and apply them to your personal circumstances.
Here’s why debt review is a good idea if you are:
All of your debt repayments will be consolidated into one reduced monthly repayment plan. Instead of having to pay numerous accounts, a consolidated amount will be worked out for you.
Additionally, the reduced monthly repayment includes your legal fees and debt review costs so there’s no upfront cost that you need to consider.
Debt review could be a good idea if you need to reduce the overall monthly cost of your debt to free up cash for your other financial obligations.
If you are struggling to keep track of all of the various debt payments, credit accounts, and what you owe to whom, then debt review might be a good idea for you.
Earlier we mentioned that your debt repayments will be consolidated, if you are unfamiliar with the term, this means that all of your accounts will be grouped or merged into one simple instalment.
Now, instead of paying four different creditors and tracking how much you owe and need to pay on each account, you only have to pay one amount. Then your debt review partner will distribute and track the various creditor accounts on your behalf.
It goes without saying that these assets need to be protected at all costs. If you are serious about your long-term success, it is more important than ever to have a thorough approach to credit risk management.
Are your creditors calling because you are behind on your vehicle or home loan repayments? If so, then your assets could be at risk.
The debt review process acts as a form of legal intervention that can help protect your car, home, and other valuables before it is too late.
If your assets are at risk of repossession then debt review is a good idea (as long as you are committed and not just looking for a quick-fix.)
Sometimes you’ll think you have a handle on things with your own plan, but it’s a false hope because slight setbacks completely derail you and your plan.
Debt review is a regulated process, there is no fluctuation or sneaky surprises.
Debt review might be a good idea if you’re looking for some external motivation or a third-party that makes sure that you adhere to the agreed repayment plan.
Often you hear complaints about debt review, but that’s because people undertake it without thinking it through and understanding that it’s a long-term commitment and it takes time. We want instant gratification, which is why credit is so popular, but you need to be patient under debt review.
Now you tell us, is debt review a good idea for you? If you answered yes, then check to see if you qualify online. We might be able to help change your life.
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.