From debt doomed to debt-free: How debt review can turn your finances around

Do you feel like you're swimming in a sea of debt, with no shore in sight? Well, fear not, because there's a lifeboat that can rescue you from sinking further: debt review.

This process can be your ticket to a debt-free life, but what is debt review exactly? Think of it like having a personal financial coach who helps you assess your debts, income, and expenses, and creates a manageable payment plan. So, if you're ready to grab hold of that lifeboat and start sailing towards financial stability, then let's dive into the world of debt review!

Before we look at the long-term implications of going under debt review, let’s take a closer look at what debt review actually is and how it works.

What is debt review and how does it work?

Debt review, also known as debt counselling, is a process that provides a solution for South Africans who are struggling with debt. It’s a legal process regulated by the National Credit Regulator (NCR) that allows individuals who are over-indebted to seek assistance from a debt counsellor.

The debt counsellor will assess your financial situation and determine if you are indeed over-indebted. If you are, they will then work with you to create a personalized debt repayment plan that fits within your budget.

The repayment plan will consolidate all of your outstanding debts into one monthly payment, which will be paid to a payment distribution agency. This agency will then distribute the funds to your creditors on your behalf. The goal of debt review is to help individuals get back on track with their finances and ultimately become debt-free.

We have many articles and guides on debt review and if you want to know more about how it works, if it’s right for you or what the process entails please check out our other posts.

How long does the debt counselling process take?

The debt review process is not a quick fix and can take anywhere from three to five years to complete. It’s not a quick fix for your financial troubles. The process takes time, and it's essential to understand that it's a long-term solution.

In addition, it takes discipline to stay on top of your repayments and not be tempted to fall off the wagon. That’s why it’s important not to fall for the common narrative that suggests that it's a solution to all your financial woes and will work like magic.

But, that being said if you're committed to getting out of debt and understand that it will take time, then debt review can help you turn your finances, and life around.

Debt review is effective: here’s how we know

Debt review has proven to be an effective solution for those struggling with overwhelming debt in South Africa. This is because debt review allows individuals to consolidate debt and create a feasible repayment plan that works for their specific financial situation.

Through debt review, you’ll work with a debt counsellor to negotiate with creditors on your behalf, often resulting in reduced interest rates and more manageable monthly payments.

This allows you to get out of debt while still being able to cover your living expenses. Additionally, debt review is a legally recognised process in South Africa, providing protection for individuals from legal action and harassment by creditors.

Potential benefits of debt review

• Lower monthly payments: Debt review can help you negotiate lower monthly payments by extending your repayment period or lowering your interest rates.
• Protection from legal action: Once you're under debt review, your creditors can't take legal action against you for your debts, providing you make your payments as agreed.
• Reduced stress: Knowing that you're taking steps towards resolving your debt issues can reduce stress and anxiety.
• Improved credit score: As you make regular payments towards your debts, your credit score can start to improve, making it easier for you to access credit in the future.
• Financial education: Debt review providers often offer financial education and counselling to help you manage your finances better and avoid future debt problems.
• Single monthly payment: Instead of juggling multiple payments to different creditors, debt review consolidates your debts into a single monthly payment, making it easier to manage your finances.
• Debt freedom: By completing the debt review process and making all your payments, you can eventually become debt-free and achieve greater financial freedom.

Is debt review better than debt consolidation?

Debt review and debt consolidation are two different debt management options, and the better option depends on an individual's unique financial situation.

However, debt review is often considered a better option than debt consolidation because it offers more comprehensive debt relief solutions.

Unlike debt consolidation, which involves taking out a larger loan to pay off smaller existing debts, debt review is a legal process that provides legal protection against creditors and prevents them from taking action against you while you’re undergoing debt review. This can give you peace of mind and reduce the stress associated with overwhelming debt.

If you feel like you're drowning in debt and don't know where to turn, debt review may be the lifeboat you need. As we've seen, debt review is a legal process that helps South Africans who are over-indebted create a personalised debt repayment plan that fits within their budget.

The process can consolidate all outstanding debts into one monthly payment and provide legal protection against creditors, reducing the stress associated with overwhelming debt.

It's important to note that debt review is not a quick fix for your financial troubles, and the process can take anywhere from three to five years to complete.

However, it is a long-term solution that can help you turn your finances, and ultimately your life, around. Staying disciplined and committed to making regular payments towards your debts is essential to the success of the process.

Debt review has proven to be an effective solution for those struggling with overwhelming debt, and it can provide several potential benefits, including lower monthly payments, protection from legal action, reduced stress, improved credit score, financial education, a single monthly payment, and debt freedom. These benefits can help individuals achieve greater financial stability and freedom.

While debt review and debt consolidation are two different debt management options, debt review is often considered a better option for those who simply can no longer cope due to its more comprehensive debt relief solutions and legal protection against creditors. However, the better option ultimately depends on an individual's unique financial situation.

In summary, debt review can be a powerful tool to help you take control of your finances and achieve debt freedom. If you're considering debt review, it's essential to work with a reputable debt counsellor and understand the process fully to ensure the best possible outcome for your financial future.