Does a debt review plan work?
How Does a Debt Review Plan Work?
You may have asked yourself: how does a debt review plan work? Simply put, if you’re over-indebted and looking for a sound, veritable way to get prompt, appreciable relief, look no further than a debt review plan.
The best way to explain how a debt review plan works is to start with the National Credit Amnesty Act, which came into force on 1 April 2014.
The credit amnesty enforced the removal of all negative information listed under consumers’ credit profiles, which are kept on record by the credit bureaus.
Accordingly, +/-2.8 million consumers’ were given a clean slate. Going forward, once consumers settle their debts, their credit records are cleared of all adverse listings.
Does a Debt Review Plan Work Against You?
If you apply for a job, where your prospective employer needs to trust you with the handling of money, you will likely have to undergo a credit check.
Over the last 10 years, 20-25% of job applicants were recorded to have impaired credit records, dropping to 10.5%, after the credit amnesty was introduced. This figure is currently at 16% and is evidently back on the rise.
If you are credit impaired, the best advice we can give you is to enter a debt review plan. Committing to a debt review plan will show your prospective employer that you are being pro-active about improving your over-indebted status.
Does a Debt Review Plan Work for Everyone?
You need to be over-indebted to qualify for a debt review plan. Your debt counsellors will assess whether or not you are over-indebted and give you advice that is appropriate to your circumstances.
There are 23.11 million credit-active consumers in South Africa right now and only 12.7 million have good credit records. Clearly, consumer behaviour hasn’t changed for the better since the credit amnesty came into effect, as over 50% of consumers are in 3 or more months of arrears.
This may be due to consumers viewing the removal of their adverse listings as an opportunity to apply for new credit, without considering affordability. Consequently, the best way to get out of an uncontrollable debt spiral is to sign up for a debt review plan.
When Does a Debt Review Plan Work?
A debt review plan works as soon as your debt counsellor notifies your credit providers that you’re under debt review. This means you have immediate protection against repossession, garnishee orders and other aggressive debt collection methods.
Why Does a Debt Review Plan Work?
Because your debt counsellor will negotiate with your credit providers and arrange lower monthly instalments and interest rates for you, easing your cash flow constraints, not too mentioned your frayed nerves.
The credit amnesty may not have been as effective as expected, but you still have the choice to rectify your over-indebtedness and get the life you want, by entering a debt review plan with NDA today.