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Could debt review help you get out of debt? It helped Dawn* clear her debts and taught her financial discipline so she could manage her budget better and live within her means! Here is her story.
Debt review in brief
What it is: Debt review, also known as debt counselling, is a formal process that allows you to pay off your debt according to an affordable payment plan, while ensuring you have enough money to pay your day-to-day living expenses.
How it works: A debt counsellor will assess your financial situation. If you qualify for debt review, your debt counsellor will draw up a payment plan, which they will get your creditors to agree to. You will pay one amount every month, which is used to pay your creditors after the debt counsellor has taken a small fee. The fee is regulated by the National Credit Act. When your debts are paid in full, you are issued with a clearance certificate to confirm you have completed debt review.
Be aware of: There are strict criteria for entering debt review. In addition to struggling to pay your debts you need to have a regular income, and your creditors cannot have taken legal action against you. Debt review can last for a number of years, and while you are in debt review you cannot take on any credit, for example vehicle finance to buy a new car.
The bonus: Your creditors cannot ask you for payments or harass you for money once you are in debt review, which can be a huge relief if you have been receiving and/or avoiding the calls, messages and demands to pay up!
Dawn* experienced this relief when she entered debt review. Here is her story.
Why I entered debt review
“I had the normal types of debt that I believe most people do. Car, credit and store cards and personal loans. When I lost my job, I decided to start my own business. It went quite well initially, but then changes to the economy and the 2008 economic instability placed the business under strain, and eventually it was no longer viable.”
“At that point I took a job that paid significantly less, and I had no choice but to start looking for solutions to my debt problems. It was a very stressful time, with people calling me, and threatening to hand me over and take legal action against me. I did my research and found out about debt counselling. I applied to a debt counsellor, Debt Rescue, to enter debt review.”
My experience of debt review
“The relief was immediate. Though my creditors still called me for a short while after applying for debt review, I just referred them to my debt counsellor.
“As part of debt review, I had to make sure I lived within my budget. I made some lifestyle changes, which mostly involved just planning my expenses better. “The process took four years to complete.”
Exiting debt review
“The exit process was simple, because as soon as all my debt was paid up, I was issued with a Clearance Certificate and I was debt free.”
What I learnt
“A lot of financial discipline during the process! Even though I have exited debt review, I do my best to keep applying the financial discipline I learnt. Though I have incurred new debt since, I now am very careful to ensure that I can afford it, and that it remains within my budget.”
My advice for those considering debt review
“Debt review is definitely the best option when you are struggling financially. It is a process, and not a quick fix. But realistically, the object is to become debt free in the end. During the process you can afford your living expenses, and your debt is being repaid every month, making debt review the best solution available.”
*Name changed
Could debt review work for you?
Debt review can relieve your debt stress and give you a viable way to pay your debts without incurring any more. And you have enough to pay your living expenses. It does take time, but the end result of being debt free is a huge relief on a personal and emotional level. You also have the chance, when exiting debt review, to spend more wisely and live within your means. Plus, the money you have been spending on debt can now be spent on building your wealth!
However, there is no guarantee that when you exit debt review you won’t incur lots of debt again, which has happened to some who have gone through the process! Like Dawn*, you have to stick to your budget and not incur debt you cannot afford! Taking a financial education course, such as the course from Truth About Money, will also help you learn how to manage your money and debt well.
The bottom line
Debt review has helped many people but always remember that during and after debt review you need to apply some financial discipline and manage your money well to ensure when you are out of debt, you stay out of debt!