How Debt Review Works

Step 1

Before applying for the debt review, the debt counsellor will have to assess your current financial situation. They’ll determine your income, compare it with your living expenses and later examine your debt exposure. If you are heavily indebted, the debt review process begins.

After examining the basics, you’ll receive a formal application from the debt counselor. This will contain all your details, income expenses, and the details of the credit provider. You’ll also need to enter your debt information like bond account, vehicle finance agreements, loan agreements, clothing account, and arrear doctor bills.

Step 3

Many folks often don’t ask for debt review help. Therefore, I’m taking my time to provide you with all the detail to help you know what to expect. After signing form 16, your creditors will receive a notice (Form 17.1). This form lets your creditor know that you’ve applied for debt review and your financial situation is under assessment. Additionally, it requests your creditor provide your debt counselor with a certificate of balance (COB)

Step 5

All credit bureaus will be notified by the NCR that you’ve applied for debt review. This prevents you from incurring further credit after applying for the debt review. Before proceeding to the next step, you can still pull out from debt review by issuing your debt counselor a written letter that you wish to stop.

Step 6

If your debt counselor doesn’t receive a withdrawal notice, your assistant will proceed with the next step by examining your financial situation with the balance certificate. This process validates that you’re over-indebted, and it is confirmed with a confirmation of Over-Indebtedness notice. Later, the details provided on the balance certificate are used to draft the repayment proposals to your creditors.

The repayment proposal shows a list of all creditors, your outstanding balances according to the COBs received, the provided installment, interest rates, and repayment terms of the debit review proposal.

Step 7

Debit counselors and creditors will then renegotiate the repayment terms of the payment proposals, and if all creditors agree to the proposals, the matter is referred to the National Consumer Tribunal for a Consent Order. In a situation where more than one creditor doesn’t agree to the proposal, the case is referred to the magistrate court in your adjudication’s jurisdiction. In most cases, you don’t need to attend these meetings, and the attorneys chosen by your debt counselor attend to them.

Step 8

The payment of your debt review installment begins from the same month you signed the form 16. This means you no longer need to pay your creditors the contractual installments. All the debt review payments are done to a Payment Distribution Agent (PDA). Regarding the national credit act, each debt counselor needs to contract a registered Payment Distribution Agent (PDA) so as to distribute its clients’ payments to the pertinent creditors. The PDA distributes the funds to your credit providers until you’ve repaid all your debts.

And that is the complete answer to how does debt review work.