HOW TO GET OUT OF DEBT REVIEW: DON’T FALL VICTIM

How to get out of debt review is a misleading promise because you cannot get out of debt review or debt counselling without paying your debt.

Debt review is a formal process designed to assist South African consumers who are struggling with debt.

Understanding debt review is important for South Africans who find themselves struggling with debt.

Debt review, also known as debt counselling, was established under the National Credit Act to assist individuals in managing their debt through structured repayment plans.

It provides a legal recourse that prevents creditors from claiming assets or taking legal action while a consumer is under debt review.

However, as with many financial services, it has become a target for unscrupulous individuals who aim to exploit those in desperate financial situations through scams.

The rise of debt-related scams has created a climate of mistrust and fear among consumers, which often deters them from seeking the help they need.

Scammers typically use false promises, asking for upfront fees and guaranteeing that they can write off debt without going through legal procedures.

It is vital that South Africans can identify legitimate debt review services and distinguish them from fraudulent schemes.

Knowledge about the legalities of the debt review process and an understanding of what debt counsellors are legally permitted to do can shield consumers from falling into traps set by con artists.

To aid in this, transparency within the industry and consumer education are extremely important. Financial authorities and legitimate debt counsellors must provide clear, accessible information to ensure that individuals are not only aware of their rights but also of the correct steps to take when considering debt review.

It is important that this information is communicated effectively, to empower consumers to make informed decisions and navigate the road to financial stability with confidence and caution.

Understanding Debt Review

Debt review is a formal process designed to assist South African consumers who are struggling with debt.

This legally recognised approach offers a structured repayment plan and protects against the possibility of assets being repossessed.

The Debt Review Process

The process begins with the debtor applying to a debt counsellor.

Upon reviewing their financial situation, the counsellor assesses whether they are over-indebted.

If so, they will inform the credit bureaus and negotiate with creditors to restructure the consumer’s debt.

A new, court-approved repayment plan is formulated, reducing monthly payments and extending the terms.

The consumer must keep strictly to this plan until all debts are settled.

Benefits of Debt Review

Debt review offers numerous advantages:

1. Legal protection from repossession and legal action by creditors.
2. A single, consolidated repayment plan tailored to the consumer’s affordability.
3. A structured, disciplined approach for debt clearance.
4. Preservation of consumer creditworthiness as courts are involved in the agreement.

Qualifying for Debt Review

To qualify for debt review, a consumer must meet certain criteria:

• You must be a South African citizen or permanent resident.
• You must have an income demonstrating the ability to make regular repayments.
• You should have outstanding debt that you are unable to pay according to current agreements.

Debt review is intended for individuals who are committed to resolving their financial situation and require assistance in managing and eliminating debt.

It is not a means of escaping obligations but rather a method for restructuring and systematically clearing debts.

Identifying Scams

Debt review scams exploit those seeking financial relief in South Africa.

It is crucial for individuals to recognise deceitful tactics and the signs that may indicate a scam.

Common Types of Debt Review Scams

Phishing Scams

These involve fraudsters pretending to be legitimate debt review companies. They send emails or texts designed to steal personal information.

Advance Fee Fraud

Scammers guarantee debt relief for an upfront payment, often disappearing once the fee is paid.

Unauthorised Firms

Some entities operate without the proper licences, offering debt services illegally.

Red Flags and Warning Signs

• Unsolicited Offers: Genuine firms seldom contact people out of the blue. Be wary of unexpected calls or messages.
• Pressure Tactics: Scammers often create a sense of urgency to provoke quick decisions without proper consideration.
• Lack of Transparency: Any company unwilling to provide detailed information about their services may not be trustworthy.
• Request for Personal Information: Be cautious when asked for personal or financial details, especially if it’s over the phone or via email.
• No Physical Address: Legitimate businesses typically have a verifiable physical location, not just a P.O. Box or email address.

Consumer Rights and Protections

Consumers in South Africa are protected by a robust legal framework designed to safeguard their interests, especially in matters of debt review.

It’s critical for individuals to understand these protections and know how to act if they encounter scams.

Legal Framework and Regulations

In South Africa, the National Credit Act (NCA) is the cornerstone of consumer rights concerning credit and debt review processes.

Under the NCA, individuals have the right to apply for debt counselling to seek relief from over-indebtedness.

The Act outlines specific procedures debt counsellors must follow, including conducting an impartial assessment of the consumer’s financial situation and proposing a restructured payment plan to creditors, if applicable.

• Key Rights under the NCA:
  • Right to apply for debt review.
  • Protection against reckless lending.
  • Receipt of a full disclosure of all the costs involved in debt counselling.

Additionally, the National Credit Regulator (NCR) oversees the behaviour of credit providers and debt counsellors, ensuring compliance with the NCA and protection for consumers.

• NCR Responsibilities:
  • Registration and regulation of credit providers and debt counsellors.
  • Investigation of complaints.
  • Enforcement of the NCA.

Reporting Debt Review Scams

When consumers suspect a scam related to debt review, they are encouraged to report the matter promptly.

The South African Fraud Prevention Service, as well as other law enforcement agencies, are responsible for tackling financial fraud and scams.

• To Report a Debt Review Scam:
  1. Contact the National Credit Regulator.
  2. Provide all relevant details of the suspected scam, such as correspondence and transaction records.
  3. File a report with the South African Police Service if necessary.

Victims of scams can also seek recourse through the National Consumer Tribunal which adjudicates on violations of the NCA.

They must submit an application detailing the nature of their complaint for a legal resolution.

Keep in mind that you cannot simply “exit” debt review or debt counselling without paying your debts.

There are two main ways how to get out of debt review

1. Repayment completion: You successfully repay all your debts according to the negotiated plan. This is the typical and intended outcome.
2. Termination: Under specific circumstances, the National Credit Regulator (NCR) can terminate your debt review order. This can happen if your financial circumstances significantly improve, rendering the initial plan unnecessary, or if there are exceptional reasons (e.g., emigration). However, even in these cases, outstanding debt remains and must be settled through other means.

Regarding debt write-off: While creditors might occasionally agree to write off a portion of your debt during negotiations, it’s not a guaranteed outcome and shouldn’t be relied upon.

If you are serious about getting rid of your debts, there are ways to do that, but they are all difficult ways.

It is easy to get into debt but difficult to get out of it. Scammers are successful in exploiting desperate people who will follow any promise of how to get out of debt review without following the rules.

Ultimately, your goal is to repay your debts, not have them magically disappear. Legitimate debt counsellors can help you and will show you how to get out of debt review.