Debt review is a process that when carried out correctly, can significantly improve a person’s financial life, reduce their stress levels and allow them to live a meaningful and happy life once again. With this being said, not everyone can qualify for debt review and there are instances where it can be declined. Below is a list of those scenarios:
Your current budget allows you to comfortably pay your debts at the current interest rates.
You do not have enough debt to qualify
Your current monthly instalments are below the legal minimum required to qualify for debt review.
You cannot afford the debt counselling or legal fees
Your debt counsellor could not find an instalment that fitted within your budget.
There are judgments on all of your accounts or there is pending legal action on all of your accounts
You are under administration or sequestration.
Why would a debt review be declined?
Sometimes consumers just need a little budgeting advice and planning to help them deal with their debt situation. If this is the case, then they do not really need debt review. So their application could be turned down. There is no point in the consumer entering debt review.
If your application to the Debt Counsellor to be accepted for debt restructuring has been turned down and you think this is incorrect then consumers have the right to take the matter directly to the court and make a private application to a Magistrate. This can be done on your own or with the help of an attorney. Sometimes the same Debt Counsellor who did the evaluation will also be willing to help you fill in the right forms (even though they think you don’t need debt review) to start this process.
The Court (Magistrate) will then be able to look over your figures and make a discussion that you are (or aren’t) in need of debt restructuring and the full debt review process. They can then help you organise for the Debt Counsellor to assist you with the process if they feel you need it.
It is worth mentioning that this (having an application for debt review turned down) seldom, if ever, happens. Most Debt Counsellors are very happy to help financially troubled consumers make arrangements with their credit providers. This provision in the National Credit Act is more of a technical safety net built in…just in case. It has hardly ever been used though.
It is also true that most people will not apply for help through debt review if they do not actually feel financially stressed and are not really struggling to pay all their debts and make ends meet. So, applications for debt review are almost never turned down.
It is important that if you apply for debt review you get a copy of this form 17.2 to show that you were or were not accepted for debt review. It is very important that you keep a copy of the form in a safe place (digitally and one in print too).
This form can help a lot when you are contacted by any collections people once the debt review process has started. You will be able to send them a copy of this form and it will have the contact details of your Debt Counsellor on it so that they can make contact with them instead.
Advantages of debt review
Debt review is a handy financial tool, while you are under debt review the following benefits are clear:
Instant protection from debt collectors and legal action from your creditors
Creditors are not able to repossess assets as long as you keep paying your debt review instalment
Lower monthly payments
A single affordable monthly payment
Lower interest rates
In some cases, you may be able to settle your debt faster
You will be paying less on debt and therefore have more money available to spend on living expenses and supporting your family
Disadvantages of debt review
While under debt review - the following effects are to your detriment:
You are not able to apply for more debt while under debt review
In some cases, it can take longer to settle your debt
Your credit profile will be marked as under debt review while you are under debt review so that you cannot borrow money during the process
You are bound to your debt review agreement and it can't be cancelled until you complete your entire debt review plan and settle all your debts
You still need to settle the agreed payment per month so that the national distribution agency can pay your creditors.
