What
is Debt Review?
The new Credit Act 34 of 2005 (since 1 June 2007) made
it possible for any person to make use of a third option when being in
financial distress. Before the new law natural persons could apply for
sequestration or administration. Today Debt Review has joined the option list.
Debt Review is not as traumatic as the traditional
first options in such a way that even the Magistrate would first advise the
consumer to join the Debt Rehabilitation Program before taking the giant step
of sequestration.
The Debt Review / Rehabilitation Program works as
follow:
- You need to be
over-indebted to qualify for the program. That means that your income per
month must be less than your total expenses for the month.
- You have to apply
through a registered Debt Counsellor
- Once applied and
registered for the program, a listing will show on your credit reports
stating that you have applied for Debt Review.
- You will not be
allowed to make any more debt in any way possible after registration. Any
credit provider that offers you more debt can loose its license with the
NCR to trade in the credit industry.
- I negotiate with the
credit provider, on behalf of the client for different, but more
affordable installments or down payments, which they have to accept (or
not).
- Should the credit provider
not accept, I am in the position to offer an alternative payment
arrangement (with different installments). Should
one of the credit providers not accept this offer, the matter will be
taken further in court (this is a “worst case scenario”)
- With registration, I
arrange a new debit order (on a new bank account which needs to be
opened). The client thereafter starts paying from the first salary pay
date after the application procedure took place.
- Once all debt has been
paid / settled up to date, the clients name is removed entirely from the
Credit Bureaus and his/her name is CLEAN. No trace of “under debt
review” will be found.
To me it is important that the client keep his/her
assets, such as house/s and/or motor vehicle/s. In certain circumstances, it
will however be suggested to sell such an asset as mentioned above – this
however will vary from one client to another. Should the client remain stable
with his/her new budget and remain strict to his/her new payment and budget
rules, he/she will reap many fruit from this process.
Note that debt counseling or reviewing is nothing to
be shy about. In
© 2008 Boekevat cc