The Truth About Exiting Debt Review

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In these tough economic times, many South Africans have found themselves sinking deeper into the dark trenches of over-indebtedness. Debt advice, which was introduced by the National Credit Act to protect consumers when borrowing money from financial service providers, has been a much needed lifeline for many people.

Under the Debt Review Program, a qualified advisor negotiates a single, low monthly payment for all debt securities. This new repayment structure takes into account all existing household expenses, such as transportation, rent, utilities and groceries, while allowing the consumer to pay off their debt while comfortably paying their monthly living expenses.

A large majority of consumers who leave the debt review program often return. Many people enter the program seeking immediate relief from debt collectors and creditors, only to exit before their debt is successfully repaid.

As the ultimate goal of the program, consumers are expected to reach a stage where they have paid off all their debts and can leave the program with a fresh start in the world of credit. This can be short-sighted and possibly risky, as it leaves the consumer vulnerable to legal action from creditors and possibly even asset repossession through the courts.

A popular consumer question in the program is: when can i leave? In order to understand the examination of exit debts, one must first understand the processes involved in entering a program.

To begin, let’s look at the definition of debt review. This is a legal process regulated by the National Credit Regulator (NCR) which is ordered by a court. The output of the program also passes through these same channels.

The NCR outlines the following guidelines for exiting debt review:

Everything is done through the magistrate’s court

First, the NCR clarifies that an order declaring a consumer in debt to be subject to a debt review cannot be granted by a high court, nor can it deal with pronunciation on the question of whether the consumer should be removed from the examination of his debt. All debt review proceedings take place in the district court.

Before a court order is made

As with all legal proceedings, a court order declaring a consumer in debt control can take time. In the meantime, a qualified credit counselor may have already declared a consumer over-indebted and restructured their repayment terms, working with their creditors.

In cases where a court order has not yet been granted and a consumer, with his debt counselor that he is fit to manage his debts, the debt counselor will present the facts to the court in the hope of have the court order overturned. .

Examples of cases where this can happen are in cases of increased income or a windfall of money that helps pay off a large portion of consumer debts.

After a court order has been granted

In accordance with the latest NCR regulations released earlier this year, the only way consumers can exit debt review after a court order has been granted is if they have settled all of their debts in accordance with the restructured agreement. , with the exception of a home loan.

Note that although the restructured agreement is intended to help the consumer at the beginning of their debt review journey, if the consumer’s financial situation improves, this may be communicated to the debt counselor, meaning that the debt review process could end sooner than the first one. OK.

Once a consumer has cleared all of their debt, their debt counselor issues a clearance certificate within seven business days, and this is submitted to all credit bureaus who then remove the review flag debt that puts their credit score back to zero.

With a clean slate, the consumer is now free to re-enter the credit market.

An important aspect of the Debt Review Program is that it denies consumers from accumulating new debt while paying off their existing debt. This trains the consumer to adopt healthier financial management habits, such as saving and budgeting.

This is especially important because as they re-enter the credit market with a zero credit score, they must gradually rebuild it. This can be done by adopting wise credit management habits, such as only spending money on affordable things and strictly sticking to a budget.

This is where consumers need to be careful not to find themselves in debt scrutiny again,

Debt review can be a lifesaver for consumers who are overwhelmed with debt. It can provide common ground to cover household expenses, protect it from creditor harassment, and prevent repossession of its assets.

One of the greatest gifts the Debt Review offers consumers is financial education to better manage their personal finances. With this knowledge, not only do they become debt free, but they can also achieve financial freedom.

Charnel Collins CEO of National Debt Advisors (NDA).

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