'Debt review' stays on your name until you complete the debt review process, get your clearance certificate and are declared debt-free. This usually takes between 36-60 months, but it can be even faster. After the process, the debt review status is permanently removed.
With this being said, not everyone can qualify for debt review and there are instances where it can be declined. Below is a list of those scenarios: Your current budget allows you to comfortably pay your debts at the current interest rates. You do not have enough debt to qualify.
To check your debt review status, you have to request your credit report from a credit bureau like TransUnion or Experian. You can do this for free once every year; otherwise, the credit report could cost a few Rand – we recommend checking with your chosen service provider before requesting your report.
During this period, you could pay your creditors directly or use an intermediary called a payment distribution agent. The agent keeps track of how much you pay each creditor in line with your payment plan and sends you and your debt counsellor monthly statements.
Pay More Than the Minimum
If you want to get out of debt faster, paying more than the minimum amount required each month can make a huge difference. Even small extra payments can help reduce the amount of interest you pay and shorten your repayment period.
Keep in mind that, just like collectors, creditors are not compelled to accept your payment offer. The idea that they have to accept your payment or discharge the debt is a myth (see first paragraph). When creditors refuse payments, it's usually because company policy prohibits it.
You will need to wait until your debt review period is over if you do decide to obtain a loan though. Reviewing your debts is a step toward financial freedom. You won't get any more unsolicited loan and credit card offers while under debt review.
Legally, a debt collector must mail out a debt validation letter within five days of first contacting you. If a debt collector doesn't send you a debt validation letter, they are violating the Fair Debt Collection Practices Act (FDCPA).
What happens if I use my credit card while under debt review? You can't use your credit card once you're under debt counselling. Any attempt to do so would violate the terms of your debt counselling agreement.
Debt review extends the period of repayment, often significantly. This means that you will be committing to a long-term plan that may last several years. While this can make your monthly payments more manageable, it also means you will be in debt for a more extended period.
The Maximum is Five Years
When your debt counsellor negotiates new terms for your debt with your credit providers, the plan must focus on paying off your debt in 60 months (five years) or less. This is generally the longest repayment period that your credit providers would agree to.
Being under debt review will restrict you from buying a cell phone under contract because it falls under a credit agreement which is prohibited completely when you are under debt review. This means that if you can't afford to buy a cell phone cash, you will not be able to buy a cell phone at all.
You will not be able to open new accounts while under Debt Review, however you can open a new bank account. A difficult reality facing over-indebted consumers is their inability to cope with the various debt repayments in their name.
The bottom line. The journey from debt settlement to homeownership is typically a matter of years rather than months. While the exact timeline can vary based on numerous factors, most individuals should expect to wait at least 2-3 years, with 4-7 years being more common for conventional loans.
If DMC owns the debt, we will submit a request to the relevant credit bureau to update your credit profile. Please note that updates can take up to 30 days to reflect on the credit bureau. How can I check my credit record?
Specifically, the rule states that a debt collector cannot: Make more than seven calls within a seven-day period to a consumer regarding a specific debt. Call a consumer within seven days after having a telephone conversation about that debt.
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
The debt counselling or debt review process typically takes between 36 to 60 months (3 to 5 years) to complete. This duration can vary based on several factors, including the total amount of debt, the interest rates negotiated, the monthly payment capacity, and the individual's commitment to the repayment plan.
The answer is yes, absolutely! Debt review is a proven, structured legal debt relief process, whereby a debt counsellor does a financial analysis and comes up with affordable payment arrangements on your behalf. Accordingly, you will be able to manage your financial affairs hassle-free.
When you apply for debt review, we will exclude from the application rent-to-buy agreements, loans obtained from loan sharks, doctors' fees, and insurance premiums. This is in line with the debt review regulations, as dictated by the National Credit Act and enforced by the National Credit Regulator.
Debt collection thresholds vary widely and depend on several factors. While there's no legal minimum, practical limitations often determine the smallest debt amount collection agencies will pursue.
Avoid negotiating over the phone with your creditor. Don't look too eager to settle. Make it clear to the creditor that you intend to pay the debt. Explain that you are unable to pay the debt due to (detail your hardship).
Typically, debt collectors will only pursue legal action when the amount owed is in excess of $5,000, but they can sue for less. “If they do sue, you need to show up at court,” says Lewis-Parks.