Debt review is a process that allows over-indebted consumers to repay their debts in a structured way. This process provides them with legal protection while making repayments affordable and removing them from creditor harassment and asset repossession threats.
During debt review, your debt counsellor will work with you to compile all of your accounts and create a payment plan that will see you pay off most of your existing outstanding debts. This will include negotiating interest rates, payment options and instalments with all your creditors.
Your debt counsellor will then prepare a proposal to be presented to your creditors and the credit bureaus. The proposal will show a list of your credit providers, current outstanding balances as per your COB’s received, the offered instalments and interest rates on each of your debts.
Once your debt review proposal is approved, the credit bureaus update their records to indicate that you are under debt review and you cannot access any new credit while you are under debt review. However, you are still able to make payments on your existing debts as per your new debt repayment plan.
The debt counsellor will then approach the courts to have your rearranged payment plan made an order of the court. This means that your assets are protected and all your credit providers must agree to the rearranged plan in order for you to be debt-free.
You will need to make sure that you stay connected with your debt counsellor at all times to ensure that you are aware of any changes in your financial position and any legal notices or phone calls from creditors. It is also important to keep up to date with your monthly payments, as this will ensure that your debts are paid off in a timely manner.
This may be hard to do if you are over-indebted or struggling financially, but it is possible. Many people have found that by sticking to their debt repayment plan, they are able to get out of debt in a very short timeframe.
In most cases, clients exit debt review within a period of 3 to 5 years after signing up to a debt review program. This will depend on a number of factors such as how much one is able to pay towards their debts, their income and the length of the process.
When you are able to exit debt review, your debt counsellor will issue you with a clearance certificate that shows that you have left debt review and that you are now debt-free. This will allow you to start applying for credit again in the future.
Once you exit debt review, your counsellor will remove you from the program and the debt review status will be removed from your credit record permanently. This can be a stressful time for you and your family, but it is well worth it as it will prevent you from having to deal with the threat of asset repossession and legal action by creditors while you are under debt review.