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What you need to know about getting out of debt

Debt Counselling is not administration. It is also not insolvency. It is restructuring one's debt to make the payments more affordable. It is cost effective and can be completed within 5 years. All costs are profile dependant and are regulated by the NCR fee guidelines.

If you are finding yourself in debt and you cannot seem to make ends meet, however hard you try, it might be advisable to apply to be placed either under debt review, or to have your debt consolidated. The procedures and requirements for these available remedies differ in that in order to have debt consolidated, you will have to be in the financial position to apply for a consolidation loan. This process will allow you to put all your debt such as credit card accounts, store accounts, personal loans etc into a single loan. This will usually bring the instalments down and extend the loan term.

When you are finding yourself so deep in debt that you have started missing payments and will not be able to qualify for a consolidated loan, it will be best to apply for debt review. This a process designed in terms of the National Credit Act 34 of 2005. When you as the consumer are unable to pay your debts timeously, you may apply to a debt counsellor who will assist you with restructuring your debt into one affordable monthly instalment. 

Debt Counselling is not administration. It is also not insolvency. It is restructuring one's debt to make the payments more affordable. It is cost effective and can be completed within 5 years. All costs are profile dependant and are regulated by the NCR fee guidelines.

The process is initiated by consulting a registered debt counsellor who will reassess your budget and debt commitments. Once you have been found to be over indebted, your debt counsellor will provide you with a new budget which has been drawn according to your new repayment plan. Should you accept the new repayment plan, your application will be accepted.

Your debt counsellor will then start to negotiate a repayment plan on your behalf which will change the rate concessions, the terms and instalments. Since debt review is a legal process the new contract plan needs be made legally binding in order to protect you from potential increases, and commits you to the new payment plan. This is done through the serving a notice of motion, initiating the court process.

Your first instalment to your payment distribution agent (PDA) will be made from your very first payday. Only one payment per month is made to the PDA who then distributes the payment to your credit providers in terms of the payment plan.

Once your debt has been repaid, you will be able to apply for a Clearance Certificate which will enable you to go on debt again – this is however not advisable. 

At Bernice De Beer Attorneys Inc. we can refer you to a Registered Debt Counsellor who will initiate the debt review process. We act as the attorneys of record to obtain the consent order in these debt review proceedings. Naturally, we are well versed and equipped to assist all our clients with debt review matters.

To know more about debt counselling contact our office today for a no obligation free consultation.

- Article written by Bernice de Beer & Adv. Sean Kelly 

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