In our days many consumers often turn to debt review as a solution to their financial problems. The National Debt Review Center, warns that applying for debt counselling should be carefully considered as there are both advantages and disadvantages to the process.
Debt counselling was introduced in 2007, with the National Credit Act 34 of 2005 and the service was designed for consumers that are over-indebted.
One of the major advantages is that debt counsellors can, negotiate with the customer’s creditors to restructure an affordable single repayment amount.
Through this process, the credit bureaus are advised by the debt counsellors that the customer has applied for debt review and the customer’s credit profile will be updated accordingly, instead of credit providers pursuing with summons and judgements, which negatively affects the customer’s credit rating.
The other real benefit of debt review is that it can protect your assets from being repossessed by the credit provider.
Let us not waste you any more time and list you the most important benefits as well as disadvantages of debt review below.
All of your debt repayments will be consolidated into one reduced monthly repayment plan.
The great thing about debt counselling is that instead of paying numerous accounts, which you can easily lose track of, The National Debt Review Center will work out an amount that covers all of your repayments. This includes all your legal fees and debt review costs, with lower interest rates.
Your assets, including your home and car, will be protected from repossession.
If you’re fearing that your home and car will be repossessed because you’re in too deep, you’re not alone. Debt counselling will protect your assets from being repossessed as a result of defaulting on repayments.
You will no longer get calls from your creditors demanding payment.
Once placed under debt review, you will no longer be at risk of getting deeper into debt. The National Credit Regulator will flag your credit profile, barring you from taking out more credit. This flag will be removed from your credit profile once you have settled all your debt.
There is no permanent record of having undergone debt counselling.
There is only one monthly repayment to be made.
Your budget will meet your basic needs first before provision is made for debts.
You will never pay more money than you can reasonably afford.
A debt counsellor will suggest ways of cutting costs and saving money.
Gives you Peace of Mind that your debt is being paid.
Help You Live Comfortably with all living expenses covered.
Help You Reach Your Goal of settling the debt.
Helps you Change your financial spending behaviour.
You do not pay any money upfront.
Alarm bells should go off if the Debt Counsellor makes such a request. Asking for money upfront is not part of the Debt Review process and indicates that the Debt Review company is untrustworthy.
All Debt Review fees are strictly prescribed by the Nation Credit Regulator (NCR) and are pretty much the same for all South African Debt Counsellors.
There are no up-front fees because the fee structure is created in such a way that all the fees form part of your reduced monthly repayment plan. Each client’s fee will differ because it is worked out as a percentage of the monthly debt you owe. There are five fees you will come across in your Debt Review:
Debt Counsellors fee
Payment Distribution Agency fee
Reckless credit check fee
During your complimentary debt assessment, we will be able to determine what your specific fee structure will look like. This assessment is a great way to see what your fees will be, and it is without obligation, so you can decide after the assessment of whether Debt Review will work for you.
You may not qualify for debt counselling.
If, after assessing your income and expenses, your debt counsellor determines that you are not over-indebted, you will be issued with a rejection letter and you will then have to pay a rejection fee. According to the National Credit Act (NCA), one of your options is to personally approach a magistrate’s court to apply for a court order that declares you as over-indebted.
Not all debt counselling firms are legitimate.
Your efforts to financial freedom may turn out to be in vain if you opt for an unscrupulous debt counsellor. If you have any doubts, simply ask for their registration number and looking them up on the National Credit Regulator’s (NCR) website. Professional debt counselling firms are required by law, to register with the NCR.
Your debts might take longer to pay off as a result of paying smaller amounts each month
Your Debt Review (application/status?) will be listed on your credit record until the completion of the program or when all your debt listed under debt review is paid up in full.
Feel free to confirm The National Debt Review Center NCR authorisation number: NCRDC3106. Rest assured, we are compliant with the National Credit Act and all of our services are regulated by the NCR.
Costs involved in debt counselling
Your debt counsellor is required by law to ensure that the costs involved in debt counselling don’t cut into your living costs. The purpose of debt counselling is to provide you with financial relief by offering lower monthly instalments and interest rates. At NDRC, we will disclose our fees to you upfront and in full before finalising anything.
Debt counselling may not cover all of your debts
If one of your credit providers has already commenced legal proceedings or a judgment has been granted against you as a result of the default, your debt counsellor will not be able to include these debts in your new debt repayment plan.
In light of this, always be sure to contact The National Debt Review Center as soon as you begin to struggle with your payments, so that all of your instalments can be reduced immediately.