Debt Articles
What Is Debt Review?
Almost everyone has debt these days. With the price of petrol, cars, houses, consumables, and your monthly municipal bill, it's almost impossible to pay cash for everything. Yes, and unfortunately we tend to overspend and live above our means. It's natural to want to spend the money you earn. Thing is, we make unwise purchases and don't think before we ink!! With the result, we end up with debt that we can't handle.
This is why it could be necessary to apply for debt review, even if you think you don't need it. It's worth it in the long run. Let me explain:
How does debt review work?
You will apply for debt review with the help of a registered debt counsellor or consultant. He will need to look at all your financial information, including your income, expenses, assets and liabilities, and check to see whether you are over indebted. The debt review process can take up to 60 working days. Once all the info is consolidated, the debt counsellor can then determine if you are over indebted.
Unfortunately, you have to be over indebted to go under debt review. If you do not qualify for debt review, the debt counsellor can still assist you with a payment plan.
How do i start?
You will need to start somewhere, and that could mean making some painful lifestyle changes, such as starting to work through a comprehensive budget to cut back on your expenses. It could mean finding another home for expensive pets, or getting rid of your DSTV and any extravagant nights out. Ouch!! You might even need to sell your dream house, or your second car or motorbike that you can really do without. It all depends on your circumstances, but with perseverance you can pay off your debts and become debt free again! The choice is yours, take the plunge and check out debt review!
The role of a debt counsellor
If you do qualify for debt counselling, the debt counsellor will prepare a debt restructuring proposal to your creditors. The biggest benefit however, is in not having to pay the full instalment due to your creditors. A reduced payment arrangement is put in place allowing you to pay your creditors less on a monthly basis. This makes paying your debt more affordable so you can get on with your life.
The Results
Once everything is in place and the ball is rolling, you will feel like a mountain has lifted off your shoulders. It feels good to not have to stress about how you will you're your creditors at the end of every month, not to mention receiving threatening telephone calls and final demands. Great thing when being under debt review, is your creditors cannot take any legal action against you or repossess any of your assets. Bargain!
The downside of debt review
The draw back of debt counselling (and yes, there is always a downside), is that it will take you longer to get debt free, with the result, it is more expensive. Another reason is you will not be allowed to get anymore credit while under debt review. That means you will have to cut up your credit cards, yes, not so nice is it, especially since it's been your buddy for years!
The debt counsellor fees
The allowable fee is R3000 plus VAT, or R4000 plus VAT for couples. These fees are set by the NCR (National Credit Regulator), and are deducted from your monthly fees to your creditors, so you won't have to pay everything up front. That's good! There are additional after-care fees, as with all debt counsellors, but this will be explained to you by your debt counsellor. These after-care fees are limited to R300 maximum per client and are also deducted from your monthly contribution. It is a small fee, so don't fear!
Now that we have that behind us, lets look at how you can find a suitable debt counsellor that you can trust and that is registered to act legally.Debt Counselling
In reality after you have debt counsellors working for you to gain reasonable terms you can afford to repay, life should become that much more delightful again. If it all goes as planned, you will not have creditors on your back, coming after you night and day to gather what you owe them. There is little more nerve-wrangling than feeling like you are on the run, when you need to follow through on your loans, but can not afford to.
You begin to feel just like a criminal, when collection agencies call you night and day and you avoid their calls. It is tough to have to bypass the fone and post as you do not need to be hounded or see notice after notice. But, rather than avoid it all, there's an alternate solution. Everything from a bond to a vehicle payment to a credit card statement is a type of debt. The individual that can go their full life avoiding any type of debt is the exception, particularly when the economy becomes worse and folk need assistance with basic desires like groceries and clothing.
As more folk turn to credit cards or take out 2nd home loan, the more debt counsellors are seeing a need for their services. It's way easier to fall victim to debt than it is to climb out of the allegedly gaping and never-ending hole. After you realize that debt appears to be swallowing you full, it's time for you to find somebody to throw you a rescue ring and pull you to safety.
Debt counsellors are given training to help find you reasonable methods to pay down your debt and could help to get the collection agencies off your back. They need to make it reasonable for you to order a payback system that permits you to keep your head floating while you pay off old debts. Debt counselling services can regularly barter terms with your creditors that are miles better than your current ones. Your rates and the amounts you owe might even be slashed ( dependent on your situation ), permitting you to gain cheap repayments that you're able to make. Whatever the explanation for the debt problems, pro debt counsellors pass no judgment and simply are there to help fix the problem and find a workable solution.
They are going to help and offer recommendation, treating all clients the same, with respect and complete professionalism at every point.
Debt counsellors recognize when you reach out for help that you could be overwhelmed, stressed and mourning for the loss of your happiness, your life without stress and worry and for the loss of your good credit standing and economic security.
With some quality advice from trained counsellors, you can work thru this issue and get back onto your feet. Not like the creditors who can be cruel, cold and fully unsympathetic, the counsellors will treat you with the respect you merit.
Debt counsellors realize that life regularly has many shifts and changes that may throw you for a monetary loop. A few people lose roles, or suffer with money setbacks that accumulate mountains of bills. These factors can sink someone into debt before they know it. Working with debt counsellors is a more fascinating and appealing way to respond to deep debt than filing bankruptcy, which can permanently impact and change your life.
Take Control over Your Debt with Debt Review
Tough economic times are certainly leaving their mark on a great deal of individuals these days. I mean for one, loss of jobs and increasing cost of living has progressively put so many unsuspecting people in a position where they can no longer manage even the most innocent of debts.
Aggressive lending by the banks coupled with the economic downturn has left scores of individuals in the hole for money and unable to repay the banks. To put it straight they want their money and they are going to go after it with as much fire power as they can. And if you are the one in debt, you may be left to face overwhelming legal action. However, it doesn't have to be that way. Thanks to the June 2007 National Credit Act, you now have an achievable alternative to getting your way out of debt through what is called debt review.
Debt counsellors are professionals who get in between you and aggressive creditors to negotiate on your behalf. Many times there involvement will actually stop any legal action from ever taking place. Why? Because in you seeking a debt counsellor it shows the creditors that you as the borrower are not trying to skip out on paying back what you owe. The bank benefits with a monthly monetary commitment from you and you benefit with a more manageable monthly payment and possibly a reduction in the total amount you owe.
Applying for the debt review process will usually take up to 5 days to complete. All creditors must be informs with a form 17.1 Notice that you have applied for debt review. We then have 60 working days to negotiate with each creditor and apply for a court date. During this time, however, you can consider yourself covered, because as soon as the process is started the debt counsellor starts going to work in negotiating with the creditors on your behalf.
To qualify for debt review you must have some kind of income regardless of where it is coming from. So self employed individuals and salary workers may apply. The only condition is that you have enough money coming in every month to make payments to essential living expenses, like rent, food, water and lights, insurance and be able to make an offer to creditors for the outstanding debt.
Just know there is no better time than the present, so act before it is too late to apply for debt review. The absolute worst thing you can do is NOTHING. The second you realize you won't be able to make your monthly payments is the second it would be best to take steps to resolve it with a debt counsellor. If you let your debt get to the point where you receive a summons then the creditors are no longer obliged to listen to your debt counsellor. You're better off safe than sorry.
Stop losing sleep over your debt and apply for debt review today. We'll show you how step by step! Contact us now for more information.
We help people nationwide! We can even send you a debt consultant for a personal consultancy.
Take Control over Your Debt with Debt Review
Debt Counselling (also known as debt Review) introduced by the government in June 1, 2007 together with the New Credit Act in order to assist over indebted consumers who can't manage to keep up with their debt payments, debt review is regulated by the NCR (National Credit Regulators), the NCR introduces regulated Debt Counsellors, who have the expertise to help and guide people with debt problems and to design debt plans enabling people to afford their monthly debt obligations
The National Credit Act was legislated to promote fair and accessible and effective credit market as well as protecting consumers from reckless lending and over-indebtedness.
Prior to the introduction of the act was, many cases of reckless lending appeared as the previous acts(the credit agreement act and the usury act)didn't protect consumers the right way, that resulted in more than R6,000,000 over indebted consumers in South Africa, so you are not alone, but there's a way out of it its called Debt Review.
The idea behind debt review is to control your monthly payments without the need to obtain new loans and get yourself into more debt, , a debt counsellor can determine if you are over indebted and assist you with debt reconstruction and lower payments according to what you can afford. If a debt counsellor determines that you are unable to meet your monthly obligations, he will propose a debt reconstruction plan to all your credit providers and, or make a proposal to the Magistrate's Court to re-arrange your debt.
One of the debt counsellor duties is to determine if any of your credit agreements are unlawful, if so he will declare your credit agreement reckless and possibly terminate or negotiate the agreement.
The Real benefits of Debt review
- Debt Review Application costs are R50.00
- Debt Review can stop your creditors from taking legal action against you and stop repossesion of your assets.
- A debt counsellor will negotiate with your creditors on your behalf on the repayment period as well as reducing the fees added on to the principal amount due to arrears or late payments lower payments resulting in reduction in your monthly payments, in some cases up to 60% reduction, you will be left with one single monthly payment that you can afford.
- During the 60 days Debt Review process your creditors won't be able to proceed with legal action against you and the repossession any of your assets . However, you shouldn't stop making payments, if you can't make regular payments, pay what you can afford.
- Debt Review can help you control your debt without the need to obtain new loans, once you're on debt review, you won't be able to obtain new credit except debt consolidation loan, but you will have enough money to pay off your living expenses.
- As soon as your financial situation improves, and you are able to make regular payments or you paid off your debt, the debt counsellor will report the credit bureaus and provide you with a clearance certificate, you then will be able to qualify for credit.
The Debt Review Process
- A registered debt counsellor in your area will contact you and complete the Debt Review application, he will ask you to provide him with supporting documents and list of your creditors and the R50.00 application fee.
- The debt counsellor will assess your application and determine if you are over indebted or not.
- If you are indeed over indebted, the debt counsellor has 5 days to report the credit bureaus and your credit providers on your request for debt review.
- The debt counsellor will negotiate lower payments with all your creditors.
- As soon as the payment plan gets approved, the debt counsellor will set you up with the PDA (payment distribution agency) and you will have one low monthly payment to make.
- Once your debt is paid off, the debt counsellor will notify the credit bureaus, and you will be provided with a clearance certificate and become credit worthy.
Get Debt Help
More and more people find themselves burdened with loads of debt these days. They almost literally go through hell coughing up interests on their home loans, vehicle loans, personal loans and credit cardsholiday loans and more often than not, credit.
Those having the habit of reckless spending are the people who suffer more.Clearing the debts becomes their top most priority at such times.
Debt consolidation is one of the most effective ways to get rid of these debts, and breathe easy.
Make Your debt a thing of the past!
Debt consolidation is a simple method in which a person takes out one loan using the equity in his property in order to pay off a number of smaller loans. This means that the person will have only one payment to make, with the others being looked after by debt consolidation.
A majority of debt consolidation loans comes with easier interest rates and more convenient payment and monthly terms designed to assist those borrowers who are desperate to come out of the debt traps they find themselves in.
Interestingly, most of such cases occur due to reckless use of credit cards without any consideration of the consequences.
f you own a home, it will act as the security or collateral for the eventual debt consolidation loan and of unsecured debts like credit card loans.
A debt consolidation loan is preferable to the unsecured debt from credit cards or other loans because the interest rates for the latter are much higher than the former. You should, however, be careful to make your payments on a regular basis because if you fail, you run the risk of losing your home or whatever collateral you have chosen. So you must ensure that you get the necessary funds for making your payments.
Negotiation With Your Creditors!
There are many ways to consolidate debt, one of them is simply by negotiating with your creditors.
Debt consolidation is out of the question (either due to credit problems or not owning a home in the first place), notified debtors might try to negotiate with their creditors for better terms. and it is possible, depending on your credit history, interest rate, and your current balance.
Simply call your credit card provide and ask them if they will lower your interest rate. They may say no. You can always suggest to them that you've found another company with better terms.
If your track record is still good with them, this may be all that's necessary to convince them to negotiate with you so that you'll stay a loyal, and paying, customer. If you have a history of paying late, however, they probably will not be willing to lower your rate. That's unfortunate, since paying late was probably the catalyst which prompted them to raise your interest rate in the first place. Still, it's worth a phone call; it certainly doesn't hurt to ask. If you've been paying your accounts on time, asking for a lower interest rate may be the only option that you have.
Credit card companies may not necessarily see you in such dire straits if they continue to receive your payments on time. On the other hand, if you're late in paying, especially if you're more than three months in arrears, oddly enough you may have more negotiating leverage. That leverage comes with a few strings attached, however. You may be able to negotiate a lump sum settlement for your outstanding balance, in which the credit card provider accepts a portion of your debt and writes off the rest.
The settlement amount can vary, anywhere from 10-50 percent of the outstanding balance, depending on your interest rate, balance and payment history. This option comes with a couple of problems of its own, though. Settlement offers generally must be acted on within a matter of days or weeks, and if the lump-sum payment is not received the offer is withdrawn.
It stands to reason that if you're having trouble making the minimum payment, it's not likely that you'll have the cash available to settle. Additionally, the amount of your debt that gets written off is usually reported to the credit bureaus as bad debt, and that stays there for seven years.
In a summary, credit card providers may or may not be willing to work out a payment plan with you, but it costs you nothing to ask them. Negotiating a settlement that's acceptable to both parties may be cheaper and more attractive for you than consulting with a debt administration company, which comes with its own set of caveats. If your credit card debt is substantial, and you just can't make the payments anymore, it's definitely worth a try.
The Role Of A Debt Counsellor
If you select to rendezvous with a debt counsellor, you might be able to anticipate a huge release of pressure in the near future.
dependent on what kind of debt counselling services you settle on, you might be on the road toward becoming debt free. The counsellor you meet with can give you useful tips and info that would relieve a large amount of fiscal stress.
most of the people who make an appointment with a counsellor feel a bit like they can't go on at their pace with monetary troubles and the meeting with an expert will help you take control of your present position and discover a way to move on and anticipate simpler times. A complicated road of debt repayment and firm budgeting could be ahead but with a plan in hand you can at least go forwards confidently, instead of feeling like your cash situation has spiraled beyond control. Selecting an organization that will aid you with a formalized debt management plan is important to getting out of debt.
You'll be dazzled when you sit down with a debt counsellor at the sum of money you are spending on harebrained costs like dining in eateries or getting a cup of coffee each morning on the way into work. Additionally, the quantity of interest you are paying for costs like credit cards can be quite surprising.
A counsellor will help you prepare a budget plan in order that you can list what your top concerns are first to ensure they're taken care of before you tackle other debt that amasses interest or is in debts. As an example, your mortgage or lease together with resources and food are top concerns with council taxes and other daily routine expenses. A lot of things go wrong and turn a person's finances the wrong way up. Often it is a job loss and other times it's poor judgment that leads to over-extending yourself and leaving yourself with bills so high that you cannot survive.
Compound interest is a threatening thing and when it spirals beyond control, it may be critical to take extreme action. Looking for credit and debt counselling services could aid you in making a plan for a financially promising future. Debt counsellor services could help you relieve a vast amount of financial stress. Your counsellor can look at your particular situation and help you in deciding on the best plan to progress with.
For other creditors, your debt counsellor works alongside them to come up with an acceptable plan which won't only help you in achieving payments you are able to afford inside your means but also efficiently reduce your debt load also. This could involve your counsellor arranging a reduction of interest rates or settling for reduced pay-off amounts. It should only occur when there is not any other alternative available.
Before you take the plunge and arrange an appointment with a bankruptcy trustee it's sensible to meet first with a debt counsellor who can go looking for other potential solutions for you. Many folks who opt to have credit counselling work with debt counsellors who take the stress of you and work with your creditors. The creditor telephone calls will stop and rather than juggling a few payments across the month, you'll have one new lower payment that your credit counsellor will distribute among your creditors.
Credit counselling isn't for everybody. A debt counsellor must look at your situation and identify, with your creditors, whether this is a workable choice for you. Meeting with a debt counsellor is something which will bring you relief and info regarding what you need to do next. By making a telephone call and an appointment you might be really close to feeling a great burden lift from your shoulders.
The Role Of A Debt Counsellor
Are you struggling to make your monthly debt repayments? Are you constantly receiving phone calls from your creditors regarding repayment. Debt Counselling South Africa will undergo Debt Review and help you take control of your finances again. Debt Counselling South Africa is a highly effective solution for people with serious debt problems. Get peace of mind and let Debt Counselling South Africa help you by re-negotiating repayments with your creditors that you can afford. You do not have to sell your assets in order to repay creditors as in the case of an Administration order. You do not have to have a clean record or a mortgage bond in order for Debt Counselling South Africa to help you.
How do I qualify?
Anyone who, after deducting living expenses from their net salary, has less cash left over than the instalments on their total debt, may apply for Debt counselling in South Africa. The consumer now needs debt help. New negotiations will then take place and new terms and conditions will then be proposed to the creditor in order to provide the client with debt help. Do not wait for a summons from a creditor because it is then difficult for Debt Counselling South Africa to negotiate on your behalf. The creditor does not have to accept the proposal from the debt counsellor in these cases
How do I apply for Debt Counselling?
For clients to be eligible for Debt Review they require a Debt Counsellor to formally review their finances and declare that they are over-indebted and require debt help. This is determined by taking all the financial circumstances into account and then discover that the client is unable to redeem his debt. Debt Counselling South Africa will help you step by step to complete the application form.
The Debt Counselling Procedure
- The consumer supplies us with a completed application form (Form 16) and supported documents and then the procedure can begin.
- The application is reviewed by the consultant or debt counseller and sent to the back office to be captured.
- The creditors are then notified with a Form 17.1 within 5 working days that the client is now in debt counselling.
- The creditors may not take any legal action against you after this period.
- The creditors have 15 working days in total to supply debt counselling with the account information in order to make sure the information provided by the client is correct. If there is no feedback from the creditor, the debt counsellor accepts the clients documents as correct in order to go ahead with the procedure and then to establish if the consumer is over in debt.
- The restructuring Proposal is then prepaired and forwarded to each creditor.
- This process can take up to 60 working days to negotiate a debt restructuring plan with the creditors.
As soon as the consumer and credit providers consent to the restructuring plan, the National Consumer Tribunal will issue a consent order. The applicant does not attend court. This is done by the debt counsellor.
A formal debt restructuring plan is now in process and finally implemented through the Payment Distribution Agency (PDA). The PDA will then distribute your single monthly payment amongst all the creditors involved. This sums up the procedure in short.
Once all debt has been settled, the client can request a Clearance Certificate that will end the debt counselling.
What Are The Debt Counselling Fees?
An application fee of R50 is payable directly by the consumer on receiving the application form. (In some cases this is waved) A restructuring fee of the lesser of the first installment of the debt re-arrangement plan with a maximum of R3000 (excl. VAT)if the application has been accepted. In joint application with husband and wife the fee is increased to R4000. (excl. VAT)
There is a chance that some of the creditors do not accept the proposal then the matter is taken to the magistrate's court. The applicable Legal fee will be discussed by the Debt Counseller or Consultant.
A Rejection fee of R300 if the application is rejected or the consumer decides to cancel application between the process of signing Form 16 and completing the restructuring negotiations. This should bepaid immediately after cancellation.
If the Debt Counsellor fails to submit the proposal to the Credit Providers or refer the matter to a Tribunal or a Magristrate Court withing 60 business daysfrom the date of receiving the debt review application, a 100 % refund is paidto the consumer.
A Monthly after-care fee of 5 % (excl. VAT) of the monthly instalmentdebt re-arrangement plan up to a maximum of R300 (excl. VAT) for a period of 24 months, thereafter decreased to 3 % of the monthly instalment with a maximum of R300 (excluding Vat), for the remaining period.
If the consumer decides to withdraw from the process after the Debt Counselor has completed the restructuring negotiations, a fee equal to 75 % of the restructuring fee is payable by the consumer.