5 reasons why you should consider debt review

Debt is almost impossible to avoid in modern society. Debt is an inevitable part of the process of buying a home, entering the middle class, starting a business, and so on. But there are occasions when people  make mistakes or experience unanticipated setbacks in their financial well-being.

Even if you make all the proper financial decisions, you may still end up with an overwhelming amount of debt that is impossible to repay. Debt review is a common solution in such a situation.

Undergoing debt review can have various benefits, five of which are reviewed  in this article.

1.    Your monthly repayments will be reduced

The primary goal of debt review is to create a feasible strategy for paying off your obligations. When debt payments and basic living costs become unmanageable, creditors often start seizing people’s assets one by one. Reviewing your debts might get your monthly payments down to a manageable amount.

2.    Your payments will be consolidated into one manageable amount

Having multiple debts to pay means increasing the likelihood of skipping a payment, which is one of the worst possible outcomes.

Because of the potential for multiple credit cards and loans to have originated from different lenders, it can be challenging to keep track of them all. Debt review involves making just one payment to your credit counsellor.

3.    You will be legally protected from your creditors

Following the initiation of debt review, your debt counsellor will take over all communication with your debtors. In fact, creditors and credit reporting agencies are prohibited from contacting you directly.

Creditors have many tools at their disposal to get what they want from you, including the ability to freeze your account, demand the return of goods in the event of an instalment sale, petition the court for a warrant of execution to attach goods, and harass you with constant phone calls and letters.

You will no longer be served legal papers or contacted by creditors while your debt is being reviewed. The NCA provides legal protection for you and your property.

4.    Your assets are safe during the debt review process

Debt review eligibility is contingent upon completing credit counselling. If a debt counsellor finds that you are seriously over-indebted, creditor protections will be extended to you at this time.

If the credit counsellor determines that the client is over-indebted because he or she cannot afford to make their monthly payments even after making necessary budgetary cuts, then the client is in serious financial trouble.

But as long as you keep up with your new monthly payments under the terms of your revised debt repayment plan, you will be safe from legal action. It’s important to note that if you were to fall behind on your payments, the debt review may be cancelled and legal action taken against you.

5.    You will have a streamlined road towards financial freedom

Having your financial situation reviewed might help you get access to a debt repayment plan that works for your income and debt. The goal of this plan is to make making monthly instalments as easy as possible. Although it will take hard work and commitment, you can ensure that you will eventually be debt-free.

From the above, it’s clear to see that debt review is one way to financial wellness.

Also read: More South Africans look to counselling for debt relief