 Debt review is an application made by a consumer to a debt counsellor that allows the debt counsellor to investigate that person’s financial position. This course of action is taken if the person applying for debt review is unable to, or is experiencing difficulty in, meeting all of his/ her financial obligations to credit providers.
The debt counsellor will suggest a debt restructuring plan with all credit providers, or make a proposal to the Magistrate’s court to restructure the debt obligations and, if necessary, declare one or more of the creditors’ agreements ‘reckless’.
Although the primary function of a debt counsellor is to assist over-indebted consumers in terms of the debt review process, the National Credit Act allows for the assistance of consumers who are " ... nevertheless experiencing or likely to experience, difficulty satisfying all ... [their] obligations under credit agreements in a timely manner, the debt counsellor may recommend that the consumer and the respective credit providers voluntarily consider and agree on a plan of debt rearrangement" (section 86 (7)(b)).
The National Credit regulator (NCR) warns against consumers simply applying for debt review as a means of avoiding their financial obligations, and as a way of preventing creditors from instituting legal action against them. This is just one of the desperate methods that consumers are using in the fight for financial survival as more and more people find themselves defaulting on their debt repayments. According to the NCR there were 27573 applications for debt review in September, as opposed to 24068 in August – an increase of approximately 16%. |
Debt Blog 