Debt counselling can be confusing. With the conflicting and outdated information available in online forums, it’s no wonder that prospective debt review consumers are perplexed. Luckily, Limdebt has put together an updated FAQ page that includes the newest industry regulations and conventions.
Let’s dive in!
Yes and no. Let’s review the steps of debt review and how long each step might take. For a more comprehensive look at the debt review process, see our How It Works page.
The period that the application takes depends on the professionalism of your debt counsellor and how promptly you communicate. The application process can take fewer than 24 if you fill out the form and send it back the same, especially if your debt counsellor communicates promptly in turn.
According to the National Credit Act, your debt counsellor must evaluate whether you’re over-indebted “in the prescribed manner and within the prescribed time.” Convention dictates that this period is usually no more than 30 days.
The time taken to assess your finances can vary depending on how promptly your creditors communicate. Your debt counsellor must send out Form 17 (2) to notify creditors that you’ve applied for a court procedure (the court makes the final call on whether you’re over-indebted) and request information to verify your Form 16 (application form). Assessment may also take longer if you have debts from other countries.
Creditors are usually anxious to recover their debts, and so communicate promptly. All in all, the process should not exceed one month.
Some creditors may be more willing to negotiate than others. This period may vary depending on the complexities of your debts: it may take longer if your debts have varying interest rates or credit types (secured credit may take longer to negotiate than revolving credit).
Usually, the process doesn’t take more than a few weeks.
The period taken to complete creditor repayments depends on your repayment capacity (the income you have to make repayments). The more money you have to make repayments, the quicker debt review will pass. Conversely, the less money you have to make payments, the longer debt review will take. Typically, debt review takes about three to five years.
Once you’ve paid all creditors back, you can apply to the bureaux for credit clearance. The bureaux have 21 days to review and reach a verdict under the National Credit Act.
Debt counsellors have a prescribed limit on the fees they’re allowed to charge.
You should also account for the cost of your monthly repayments. Your total debt counselling costs are dependant on your choice of attorney and total repayment amount.
Yes. Once Form 17.2 (b) is submitted to your creditors and the credit bureaux, a debt review flag in the form of a status code will appear in the public records section of your credit profile. This protects you from incurring further debt and creditors from your default. The NCA explicitly sets out that you will no longer be protected with debt review if you take out another loan and that the creditor will be charged with reckless credit, unless the loan is a consolidation loan.
Our How It Works page details the various status codes you’ll see on your credit profile during debt review. During the time you make repayments, you’ll see code D4
If you miss a payment and don’t inform your debt counsellor, you may face serious consequences:
Key Takeaway: Always communicate any changes in your financial situation to your debt counsellor. They can help renegotiate agreements with creditors and protect your assets from seizure.
Usually, your debt counsellor will communicate with creditors on your behalf. Debt review protects you from having to communicate with creditors. This way, they can’t demand payment.
No. For debt review to work, you must have a source of income, whether a salary, pension, or rental, to make repayments.
All debt is covered under debt review, including your bond, car, personal loans, and revolving credit (such as store cards and credit cards).
If you have questions about debt review, reach out to Limdebt, South Africa’s preferred partner in debt management.