Is debt Counsellor the same as debt review?
Debt counselling and debt review are components of the same debt rehabilitation process, where debt counselling can be defined as the service, and debt review as the regulated process.
Debt review is a debt management solution, otherwise known as debt counselling. It allows you to consolidate your debt without having to take out a loan. With the process of debt review, DebtBusters will assess your financial situation and find the best possible way to restructure your debt.
However, you should be aware that debt review is a long-term process and it can take years to fully pay off your debt. Debt consolidation is a good option if you're looking for a more immediate solution. This process involves taking out a loan to pay off your existing debts.
A reputable credit counseling organization can give you advice on managing your money and debts, help you develop a budget, offer you free educational materials and workshops, and help you make a plan to repay your debt.
Your counsellor will look at everything you owe and will negotiate with your creditors for a more affordable repayment rate and even better repayment terms. In turn, your debts may take longer to pay off, but your monthly instalments will be far more manageable.
How can you legally exit debt review? The only way you can terminate debt review is if the debt review flag/ warning is removed from your credit report. For this debt review flag to be removed, credit bureaus need to be issued with a debt review clearance certificate.
You cannot remove yourself from debt review, but you can get a registered Debt Counsellor to do so. They will do this by issuing you with a debt review clearance certificate. However, you first need to meet one of the following criteria: All your debts have been paid up.
Consumers should be very wary of this. The only way you can exit the debt review process is if you have paid up all your debt. Anyone or company claiming they can help you leave the process before this, should be seen as a red flag. To cancel the debt review process, you need to be issued with a clearance certificate.
Typical Duration of Debt Review
Debt review is not a quick fix. It's a thorough process typically spanning 3 to 5 years, depending on the aforementioned factors. During this period, consumers are expected to live within a budget and meet their renegotiated payment obligations.
Your credit score will be low just after successfully completing the debt review process. Slowly building your credit score will take some time. Here you should allow for another few months to build this score back up again.
How does debt counseling affect your credit?
Debt counselling can help your credit score.
After the debt review process has been completed, you will receive a clearance certificate and the credit bureaus will be notified. This means that any details of judgments or arrears are cleared.
- Make a list of all your credit card debts.
- Make a budget.
- Create a strategy to pay down debt.
- Pay more than your minimum payment whenever possible.
- Set goals and timeline for repayment.
- Consolidate your debt.
- Implement a debt management plan.
If credit counseling is not the best choice for your circ*mstances, debt settlement may be the answer. Debt settlement allows you to repay creditors for less than the total amount owed.
- You are not allowed to have more credit while undergoing debt counselling.
- It does cost a little bit of money, but the fees are set by law.
- Your debts might take longer to pay off as a result of paying smaller amounts each month.
Consumers who are struggling to meet their monthly debt obligations qualify to apply for debt counselling. These consumers should have a distributable income, which will be used to offer reduced payments to their credit providers. Consumers married in community of property must jointly apply for debt counselling.
Many debt management plan (DMP) providers charge a fee for their services but some don't. It's important to remember that if you don't want to pay a fee, you don't have to.
To terminate the debt review process and to have the debt review notice removed from your credit reports requires that a court application be made for the court to find that you are not over-indebted, even if there is no court order in place for your debt review.
A: Request a clearance certificate from your debt counsellor and submit it to the credit bureau. The credit bureau will then remove the debt review status from your credit report.
Disadvantages (and their impact): No access to new credit. During Debt Review, you cannot access new loans or credit cards. While this helps break the borrowing cycle, it can restrict your financial flexibility.
Debt counselling usually lasts between three and five years, depending on the amount of debt, the arrangements the debt counsellor is able to negotiate and what you can afford to pay each month.
How much does it cost to cancel debt review?
You have to go to court to cancel the debt review. That means you have to hire a lawyer, which costs in the region of R2 500 to R3 500. If the case is opposed and goes to the high court, that could set you back around R9 000. Russell Dickerson of RD Debt Counselling recommends you conduct a cost analysis first.
While there is a process involved, rest assured that it is possible to transfer from your current debt counsellor to a different one.
Yes, you can. In fact, it is a good way to speed up your Debt Review program and to get out of debt fast. Just make sure to speak with your debt counsellor, and they will make the right arrangements for you.
Debt review is a legal process and is also useful in that your overall debt repayments can be reduced and negotiated by your debt counsellor on your behalf. The advantage of debt review is the ability to protect you against asset repossession, legal action and creditor harassment.
Once creditors and the credit bureaus receive the certificate from the Debt Counsellor, they will remove the debt review flag from the client's name. The default listings and judgements will be removed from the client's name. Only your payment history will remain.
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