It was pleasant to read this article on Fin24: https://www.fin24.com/Money/Debt/debt-review-a-lifeline-for-borrowers-committee-hears-20180215 and see Ms. Gibson’s acknowledgement that “Debt Review does provide a lifeline”. On the other hand, it’s somewhat disappointing that, although the article quotes Ms. Gibson as saying that there are shortcomings/weaknesses in the Debt Review process, it doesn’t specify what those are.

Anyway, this may be a good opportunity for us to highlight a few of the positive aspects of Debt Review.
* Debt Review protects clients from legal action. This includes protecting properties from repossession and auction, vehicles and furniture from repossession, and salaries from deductions (often referred to as “garnishees”);
* Debt Review focusses on affordability. This means that, when a client applies for Debt Review, it is our priority as Debt Counsellors to ensure that monthly needs and living expenses (including food, transport costs, accommodation costs, education costs and even expenses such as airtime, policies and family commitments) are provided for;
* The affordability consideration also encompasses the way that the Debt Counsellor’s fees are made provision for within the process. According to recommendations issued by the National Credit Regulator in August 2017, the maximum upfront fee which a Debt Counsellor can charge is R300 (comprised of a R50 Application Fee and a R250 Administration Fee for loading a client’s application in the prescribed form and notifying creditors accordingly); All other fees are included in the clients’ monthly Debt Review payments;
* Although it is not specifically stated in the National Credit Act (and is therefore not a legal requirement), most creditors will renegotiate interest rates on accounts which are under Debt Review. This benefits the Restructuring Proposals which a Debt Counsellor drafts, and reduces the term within which the outstanding debts are settled;
* Once a client has paid their debts via Debt Review, their credit records are cleared. It is our practice to verify the settlement and closure of the clients’ accounts by obtaining Paid-Up letters from the creditors and forwarding these to the credit bureaus with the Clearance Certificate. This ensures that the credit bureaus record the accounts which were under Debt Review as “paid in full”, and expunge the record of Debt Review from the client’s credit profile (as stipulated in Section 71 of the National Credit Act, i.e. they are legally obligated to do so).

A final positive thought: Debt Counsellors are impartial – we are neither fighting for the client, nor for the credit provider, but are fulfilling a statutory function. As a consequence, we are able to assist BOTH. Consumers get their lifeline, and credit providers receive payments for outstanding debts which they may otherwise either have to write off or try and recover by way of legal action, thereby incurring additional legal or collections costs.

If you’re in a situation where you feel that Debt Review may help you, it would be our pleasure to do a free, no-obligation assessment and propose a solution. Our details are on our “Contacts” page.