06 Jan Don’t Worry About January: Apply for Debt Review

In December 2023, South Africans spent around R7.7 billion on alcohol. If that isn’t an indication of our propensity to overspend on frivolities, what is? On a more sombre note, the Federal Reserve Bank reported that our official unemployment rate in quarter three of 2024 was 32.1% – more than a third of us face unemployment. Moreover, the Transunion Q4 Consumer Credit Report asserted that 35% of South Africans could not pay their bills in full and make credit repayments. Together, these trends indicate that many of us are set to face financial hardship in the first month of 2025.

The festive season is over: Christmas has passed, we’ve celebrated New Year’s, and all of us must return to renewed financial anxieties about how we’re to keep up with credit repayments (some from buying Christmas gifts on credit). In light of our December spending, January can be a rude awakening for many of us – we’ve no idea how we’re to pay our bills, much less make payments to credit card companies.

Luckily, there’s a way out; one that guarantees legal protection, reduced interest rates, and the safety of your assets: debt review.

What Is Debt Review?

Debt review, or debt counselling, is a legal process wherein a debt counsellor (financial negotiation practitioner) negotiates lower interest rates, reduced repayments, legal protection, and the safety of your assets on your behalf. As per the NCA (National Credit Act), creditors have no choice but to agree to negotiation efforts, as the Act sets out that creditors must comply with efforts to haul you out of over-indebtedness.

How Does Debt Review Work?

Debt review has five steps: application, notification, negotiation, payment, and clearance.

Application

To initiate debt review, you must fill out form 16. Here, you’ll list your current income, debts, and expenses. Using this form, your debt counsellor will assess whether you’re over-indebted. If you are, they’ll issue a form 17.2, which will be submitted to the courts. If you’re not, you’ll be issued a form 17.1. In this case, your application will be discarded.

Notification

Once you’ve been issued a form 17.2, your debt counsellor will inform your creditors that you’ve applied for debt review. Your name will be entered into the debt help system, a means of tracking your debt review progress. Debt counsellors use various debt review status codes that appear as letters of the alphabet. Status code C – that you’ve been declared over-indebted – will appear on your credit report. Creditors will no longer be able to take legal action against you or seize your assets.

Negotiation

Next, your debt counsellor will begin to negotiate for lower interest rates and reduced debt repayments. They’ll also create a financial plan/budget for your debt repayments. When everyone is happy with the plan, it is submitted to the Magistrate’s court, which makes the final call on whether you’re over-indebted and the negotiations are fair. If the court is satisfied, you’ll start making repayments.

Payment

All of your debt repayments will be consolidated. You’ll make payment to a PDA (payment distribution agency), that will fairly distribute your payments among your creditors. Usually, debt review lasts for three to five years, though this period can be lengthened or expedited by your repayment capacity (income).

Clearance

After you’ve finished making repayments, your debt counsellor will issue you a clearance certificate stating that you are no longer indebted (you may still owe money on your mortgage, so long as you’re making timely payments). You can use this certificate to dispute the debt review flag on your credit profile. You’ll have a clear credit report and be able to start building your credit again.

Who Can Help with Debt Review?

True North Debt is a debt counselling company that specialises in helping people who have too much debt or can’t keep up with their credit obligations because their budget doesn’t allow it. Our resident debt counsellor negotiates for lower interest rates, reduced repayments, helps you gain legal protection, and guarantees your assets are safe.

The difference? We have a specialist attorney who will appear in court on your behalf, ensuring the process is as pain-free as can be. We understand that over-indebtedness can be a defining period of one’s life. True North Debt is the easiest way out, making becoming debt-free accessible and affordable. Contact us today and experience true financial freedom.