Considering debt review? Here are some facts

Since financial freedom has become a distant dream instead of an attainable reality in light of ever-increasing economic challenges, many consumers find themselves out of options.

With 11% of the 28 million credit-active consumers blacklisted, is debt review a viable option?

While debt review can be a powerful tool for those caught in a vicious and overwhelming financial cycle, its terminology carries a negative connotation, leading people to prefer to ‘suffer it out’ rather than make the call.

In a bid to assist South Africans, the National Debt Counsellors have separated fact from fiction to help cash-strapped individuals make informed decisions.

Here is a list of facts vs fiction:

Fiction: Consumers should utilise debt review only as a last resort
Fact: While it is often seen as a last resort, it can be a vital relief that assists consumers in regaining control of their finances before reaching crisis point. Additionally, it offers protection from being blacklisted and, most importantly, creditors from pursuing legal action.

Fiction: You will never be able to access credit again
Fact: The only restriction is that you will have no access to new credit while undergoing the process. However, once all your accounts have been settled, you have the freedom to rebuild your credit score.

Fiction: Undergoing the debt review process means losing your assets
Fact: Seeking debt review helps you save your assets, as reduced payments are negotiated with creditors. Thus, by ensuring payments are made consistently, you can rest assured knowing your assets are safe from repossession.

Fiction: It is a permanent blemish on your record
Fact: While this is widely believed among consumers, it is untrue. Once all creditors have been paid, a clearance certificate is issued, providing you with a fresh start.

Fiction: It is an expensive process
Fact: The fact is, debt consolidation companies are regulated by the National Credit Regulator, which ensures the process is fair and affordable. Debt review companies do, however, require fees, which they must be transparent about.

Fiction: It will ruin my reputation with creditors
Fact: This process is designed to ensure you are making consistent payments instead of harming your reputation with creditors. Unbeknown to consumers, credit providers prefer this process over having people consistently default on their payments, which results in numerous debt collection efforts and legal action.

Source: www.nationaldebtcounsellors.co.za

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