Every person who is credit active in South Africa, meaning you have made debt or even applied for debt, has a credit profile. This credit profile can be checked by making use of what is known as a credit report.
The first step to take in determining what debts you owe, should be to get your credit report from one of the major credit bureaus in South Africa, such as Experian or Transunion.
Creditors generally report debt accounts to one or more of the credit bureau, which then add it to your credit profile on your credit report. Account types you'll be able to find on your credit report includes credit cards, personal loans, home loans, revolving credit plans, store accounts among others. Your credit report lists the amount owed on every account, along with your payment history. By law, you can obtain one free copy of your credit report every 12 months.
If you are struggling to understand your credit report, you can approach a qualified debt review company who can assist you in understanding the credit report, and can assist you with a plan should you need help tackling your debt situation.
What is debt review
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.
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.
