15 Feb Is Debt Review Good or Bad? The Pros and Cons

Posted at 14:59h in Latest News by

Is debt review good or bad? The answer depends on what you want out of debt review, your circumstances, and the state of your credit report. Typically, if you’re in such bad debt that you can’t afford monthly repayments, debt review is a good idea.  Let’s discuss the pros and cons of debt review.

Overview of debt review

Debt review is a legal process whereby you liaise with a registered debt counsellor to negotiate with creditors. The debt counsellor negotiates for lower rates, reduced debt, and reduced interest. The goal is to create an opportunity for one payment that you can afford monthly and fits into your budget. It lasts for 3-5 years. After debt review, you get a debt clearance certificate, certifying you as free from debt. You can now accrue debt once more.

Pros of debt review

Debt review is a worthwhile option for people who can’t afford to make minimum payments to their creditors. It offers a more structured and legal way to manage debt to reduce payments and make debt more manageable. Debt review offers:

  • Protection from creditors: While under debt review, creditors cannot take legal action against you, including repossessions, summons, or judgments. This provides much-needed breathing room and peace of mind.
  • Negotiated interest rates and repayments: Debt counsellors negotiate with creditors to lower interest rates and monthly payments to what you can afford. This significantly reduces your burden and frees up funds.
  • Budgeting and financial guidance: Debt counsellors can help you create a realistic budget and develop financial management skills to prevent future over-indebtedness.

Debt review is the smart thing to do if you’re over-indebted.

Cons of debt review

Debt review has its cons, too. It also takes longer than other debt management solutions–from 3-5 years–as opposed to a solution like consolidation loans. Also, you can’t take out new debt or credit during debt review.

 

Is debt review good or bad? The pros and cons of debt review.

 

If your debt is manageable and you have a stable income with a good credit score, consider taking out a consolidation loan as an alternative. It’ll be shorter in length and not leave a mark on your credit score. Don’t worry, it will also still be one monthly manageable payment, with a low interest rate depending on your credit score.

Reach out to True North Debt if you need assistance with exiting debt review.