Getting out of debt: Legal debt review explained - and what it will cost you

Getting too many calls from people to whom you owe money? Your debt can be restructured. Here's how the law works.
Getting too many calls from people to whom you owe money? Your debt can be restructured. Here's how the law works.
Image: 123rf.com/Jason Cox

Getting out of debt is hard, but not impossible. However, you may need a strategy to cope if you are feeling lost under a mountain of bills.

WesBank has compiled this fact sheet to explain what you need to know when applying for debt review.

Debt review vs debt consolidation:

Debt consolidation is essentially another loan, which covers debt up to a maximum of R300,000. You need a good credit score to be eligible to apply, you have no legal protection of your assets during the repayment period, and your debt increases over time due to the high interest you’re paying on the loan.

Debt review, on the other hand, is a formal debt rehabilitation programme introduced by the National Credit Act (NCA) in 2007, and regulated by the National Credit Regulator (NCR). Its aim is to ensure fair practice to those consumers who are genuinely struggling to make ends meet every month due to debt.

The programme covers an unlimited amount of debt, and your credit score is irrelevant - even those who have been blacklisted are eligible to apply. Anyone who has a monthly income, including rental income or a pension, which puts them in a position to make a reasonable offer to their credit providers, may apply.

What will debt review cost you?

  • There is an upfront application fee of R50, payable when you meet a debt counsellor and complete an application form.
  • Your debt counsellor's fees include a once-off restructuring fee (R6,000).
  • A monthly after-care fee (5% of your monthly instalments, limited to R500).
  • Legal fees (not exceeding R8,000) used to enrol a matter with a magistrate to obtain either a consent order or a court order.

These are included in your debt repayment plan.

Your first two to three payments are collected to cover the restructuring and legal fees, and are payable when your debt review application is approved.

There are currently more than 1,500 registered debt counsellors listed on the NCR's website: www.ncr.org.za.

"Like in any service industry, it is advisable to do your homework on the debt counselling firm you decide to approach, before doing business with them. Generally, the bigger firms are better, as they have reputations to uphold," says Ghana Msibi, the executive head of WesBank's motor division.


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