There’s often a negative perception surrounding debt review, with many labeling it as a legally binding process. However, it’s essential to consider who is making these statements. As the saying goes, “there are three sides to every story: yours, mine, and the truth.”
This article isn’t aimed at convincing you to pursue debt review—especially if you don’t qualify—but rather to clarify what debt review truly is.
Debt review is a legal process established by legislation in 2007, meaning it has been part of the South African system for over 17 years. Many experts believe that South Africa’s legislative debt relief mechanisms are among the best in the world. Our debt review specialists have been invited globally to share insights about our debt review model.
In essence, debt review is a legislative framework designed to assist consumers struggling with debt, enabling them to manage high living costs and repayments by allowing them to pay a reduced amount each month. The industry utilizes specific rules and systems, known as DCRS, to help lower interest rates, instalments, and fees.
During the debt review process, the debt counsellor and credit provider agree on the repayment amount, interest rate, and duration. While some may argue that debt review entraps you in an endless cycle, we contend that it offers legal protection against the very creditors who claim otherwise. Debt Counselling further adopts a holistic approach to assess a consumer’s affordability and capability to repay all debt within reasonable time frames.
Debt review safeguards you by preventing creditors from pursuing you for payments lower than those originally agreed upon and restructuring any arrears in your contracts. So, is debt review a form of legal entrapment or legal protection?
It’s important to recognize that the debt review process requires endurance, commitment, and patience. Financial decisions are rarely straightforward, and it’s vital to conduct thorough research to ensure you choose the right path forward. Debt review is designed to protect you as you work to resolve your financial challenges, with the end goal of rehabilitating you back into the credit market.
Another critical question is whether you can obtain credit while under debt review. The answer is no; debt review is about settling your debts, rehabilitating your financial status, and ultimately preparing to re-enter the credit market.
It’s also worth noting that if you qualify for debt review but choose not to engage with the process, you risk facing a default judgment, which can linger for up to 30 years, accruing significant interest and fees—often far exceeding the one-time fee for a debt counsellor, which typically ranges from R2,000 to R10,000.
Ultimately, it comes down to perspective and which narrative aligns best with your circumstances.
Key Questions to Consider
- Can I currently afford my debt without taking further credit?
- Am I in arrears with any of my accounts?
- Am I paying for necessities (e.g., groceries, transport, school fees) on credit?
- Am I being declined for further finance due to affordability?
If you answer yes to any of the above questions, you most likely need the services of a professional Debt Counsellor and could benefit from a professional assessment and budget.
For those considering debt review, DCASA provides a list of accredited NCR-registered members who also belong to an association for additional credibility and accountability.
Always do your own research before signing up for any debt review process.
– Article written by Vanessa Johst (DCASA) and Casper le Grange from DCSGSA, content inspired by Nadia de Weerdt Sandton DC.
1 Comment
Absolutely stunning article! Thank you Vanessa for posting it- It really breaks down key factors to consider. We often see too many consumers who tried to leave debt review as an absolute last resort which then backfires on them. As resilient and determined as our nation is to make things work- they often cling to their resolve too long- leaving them outside of the window of opportunity to assist ?