Finance

How can Debt Review help you recover from the effects of lockdown?

We’ve all felt the horrible effects of the fast-spreading virus that surprised us in 2019. If you had told me last year that businesses would close their doors, people would be forced to wear masks when they stepped outside of their homes and international travel would come to a sudden halt, I wouldn’t have believed you for one second.

The world as we know it has changed… The worldwide pandemic, COVID-19, has caused an economic shock of unprecedented scale by shutting down sectors of the global economy. Following global initiatives to stop the spread of the virus, South Africans have been left devastated by the consequences of the lockdown. 

Although necessary, the lockdown has had disastrous effects on businesses and individuals. At first, people feared their health. But, since many South Africans have lost their disposable income, savings and investments, they’re worried about their financial future. 

The lockdown has caused a knock-on effect: 

  1. Many small to medium businesses could not generate enough profits. 
  2. They faced the threat of closing down. 
  3. This resulted in wage cuts and, even worse, job loss. 
  4. This has caused a major increase in poverty and unemployment. 

Unfortunately, many individuals have taken on more debt during the lockdown just to make ends meet. Others have been unable to keep up with debt payments.

If you’re in financial trouble right now, debt review may be your saving grace. Basically, as soon as you’re under debt review:

  • Your assets are protected
  • Creditors aren’t allowed to harass you
  • You only pay one reduced monthly instalment towards all of your debt

Are you receiving a reduced income due to the lockdown? Are you struggling to keep up with debt repayments? If so, debt review may be the perfect solution to your problem. 

Here’s some more information about debt review in South Africa.

What is debt review?

Debt review, also known as debt counselling, was introduced by the National Credit Act (NCA) in 2007 to help South Africans get out of debt and to prevent them from being blacklisted.

You can contact a National Credit Regulator (NCR) registered debt counsellor to help you with the legal process.

What are the benefits of debt review?

You only make one single reduced payment towards your debt

You won’t have to stress about paying multiple creditors every month. You will only be responsible for one single monthly reduced debt payment, which you will pay to your debt counsellor. Your debt counsellor will then take care of your debt on your behalf. This way, you can rest assured that your debt repayments will be paid on time, every time.

You can’t fall deeper into debt

The debt review process ensures that you will not make more debt. The process prevents you from taking out additional debt to ensure you get rid of your current debt.

Once you’ve completed the debt review process and you have paid off your debt, you will be allowed to apply for debt.

Lower monthly instalments

Your debt counsellor will negotiate with your creditors to lower monthly repayment amounts.

Your assets are protected

Once you’re under debt review, creditors aren’t allowed to harass you or take away your assets as a form of payment. Your debt counsellor will take over all communication with your creditors.

What are the disadvantages of debt review

You need to have an income to qualify  

You need to have at least one household income as well as a sufficient amount of debt to qualify for the process. You can see if you qualify here: debt calculator.

Some debt counsellors may not be registered

A debt counsellor must be registered with the National Credit Regulators (NCR). Ask a debt counsellor for their registration number and then make sure they’re registered by checking on the NCR website.

Ready to get rid of your debt?

Times have been tougher than ever. If you’re looking for a way to regain financial stability, consider the debt review process, especially if you:

  • Are living off your credit card. Credit cards have dangerously high-interest rates.
  • Are taking out ‘bad debt’ as opposed to ‘good debt’. Buying a house or investing in education is different from using credit cards and personal loans to maintain a certain lifestyle.
  • Don’t have an emergency fund. As the lockdown has shown us, we cannot predict the future. An emergency fund should be there to help you in tough times, like the lockdown. 
  • Creditors are harassing and threatening you. If you don’t pay your creditors on time, don’t expect them to be lenient. If they cannot get the money you owe them from you, they’re allowed to take legal action against you. If you’re worried about losing your assets, apply for debt review before it’s too late.
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