In 2013, a new debt relief process was introduced, namely the Voluntary Debt Mediation Solution (VDMS). Similarly, debt review is a debt relief process, but the VDMS has been found to be problematic in a number of ways.
One such problem is that credit providers alone can adjust the consumer’s payment plan, which is stored on their company database of client profiles.
This drawn-out, complicated nature of debt mediation, doesn’t allow for a single combined payment plan, as debt review does. In most cases, indebted consumers have a couple of loans. These can include accounts, credit cards, store cards, vehicle finance etc., with a number of different credit providers.
If you want your various monthly instalments and interest rates reduced, your debt mediator needs to negotiate with your credit providers, individually. As you can imagine, this process has the capacity to be quite laborious.
Debt mediation doesn’t involve obtaining a court order. Consequently, if your credit provider threatened to take legal action against you, they would be within their rights. On the other hand, if you were under debt review, credit providers would be barred from doing so.
Under debt mediation, only a few of your instalments may be reduced. As a result, this means that the financial relief would be minimal, as opposed to going under debt review. Especially relevant to note is that debt review restructures your whole credit profile.
The National Credit Regulator (NCR) does not approve of debt mediation, as it violates the regulations of the National Credit Act (NCA). Furthermore, debt mediation does not provide consumers with protection against the repossession of their assets or having unlawful garnishee orders attached to their salaries. Under debt review, consumers are protected from this and more.
To find out more about how debt review is a better option, complete our contact form and one of our friendly consultants will give you a call back!
NDAs services are available across South Africa, including: