Debt can be a crippling burden, impacting both financial stability and mental well-being. For many South Africans, the debt review process offers a lifeline, providing structured support to regain financial control. However, it can also be a daunting proposition with many people unsure of how debt review will impact their financial future, and what their actual rights during the process are. To help simplify this process, we have put together a practical example of a fictional person’s journey through the process of debt review and what rights they should be aware of, as outlined by the National Credit Regulator (NCR).
Initiating the Debt Review Process
Joseph’s Story: Joseph, a married father of two, found himself overwhelmed by debt. Struggling to keep up with monthly repayments, he decided to explore debt review. The first step was understanding his right to apply for debt review. According to the NCR, any individual over-indebted and struggling with debt repayments has the right to apply for debt review.
Joseph approached a registered debt counsellor, leveraging his right to clear and comprehensive information. The debt counsellor explained the entire process, including associated fees, the impact on his credit score, and the expected timeframe for resolving his debts. Armed with this knowledge, Joseph felt more confident about his decision to proceed with debt review.
Choosing the Right Debt Counsellor
Choosing a debt counsellor is a crucial step and a vital right in the debt review process. The NCR ensures that consumers have the right to select a debt counsellor they are comfortable with. Joseph utilised the NCR’s public list of registered debt counsellors to find someone he trusted. This choice empowered him to take control of his financial situation with a supportive professional by his side.
Establishing a Fair and Sustainable Payment Plan
Once under debt review, Joseph’s debt counsellor conducted a thorough assessment of his financial situation. This included analysing his income and expenses to create a sustainable payment plan. According to the law, consumers have the right to a negotiated payment plan that is both affordable and feasible. The counsellor then negotiated with Joseph’s creditors to restructure his debt repayments over an agreed-upon timeframe, ensuring that the new plan was manageable within his budget.
Protection from Legal Action
One of the significant benefits of being under debt review is protection from legal action by creditors. This right, safeguarded by the NCR, meant that Joseph’s creditors could not repossess his assets or initiate court proceedings for debt collection. This protection provided Joseph with much-needed peace of mind, allowing him to focus on adhering to his new payment plan without the constant threat of legal repercussions.
Regular Monitoring and Updates
Throughout the debt review process, Joseph was entitled to regular updates from his debt counsellor. These updates included information on negotiated settlements with creditors, his total outstanding debt, and the remaining repayment period. The NCR ensures that consumers have the right to monitor the progress of their debt review, maintaining transparency and accountability. This ongoing communication helped Joseph stay informed and motivated to continue with the program.
The Right to Exit the Process
While debt review is designed to lead to full debt settlement, the NCR also recognises the right of consumers to exit the process voluntarily under certain circumstances. Joseph considered this option carefully. Before making any decisions, he consulted with his debt counsellor to understand the implications of exiting the program prematurely. It was crucial to ensure that leaving the process would not expose him to legal actions from creditors, or undo the progress he had made.
Important Considerations
Insist on Clear Communication: Throughout the debt review process, insist on clear and open communication with your debt counsellor. Understanding each step and its implications can significantly impact your journey to financial stability.
Choose the Right Counsellor: Selecting a counsellor you trust and feel comfortable with is vital. Utilise the NCR’s resources to find registered and reputable debt counsellors.
Understand Your Rights: Familiarise yourself with your rights under the debt review process. Knowing your rights to fair treatment, legal protection, and regular updates can help you navigate the process more effectively.
Plan for the Future: Even while under debt review, consider your long-term financial goals. Work with your debt counsellor to create a budget and savings plan that supports financial health beyond debt settlement.
Seek Support: If you have any concerns or questions, don’t hesitate to reach out to the NCR. They are there to ensure your rights are protected and to provide guidance throughout the process.
In the journey above, you can clearly see that Joseph has exercised numerous rights throughout the process, and taken an active role in determining the plans laid out in regards to his new monthly repayments. By understanding and insisting on his rights, Joseph was best placed to regain control of his financial situation and work towards a debt-free future.
If you find yourself overwhelmed by debt, remember that help is available, and knowing your rights can make all the difference in your journey to financial recovery. For more information and resources, visit the National Credit Regulator's website and consult with a registered debt counsellor to explore your options.
Considering the long-term implications that you could suffer when taking out credit from less than reputable lenders, it is also just as important that you consider the right financial institution for products such as credit cards and personal loans.
The RCS Group takes pride in being one of the most responsible credit providers in South Africa. We take each individual’s complete financial situation into account before approving a loan. If you are approved for a personal loan from RCS you can rest assured that it will never put you in over your head.
