Debunking some common myths about debt review

by | Aug 5, 2022 | Personal Finance

The National Credit Act (NCA) of 2007 introduced debt counselling as a means of resolving over-indebted consumers’ debt difficulties. Aside from ensuring that debt instalment amounts are affordable, debt counselling also facilitates rehabilitation for consumers. As a result, consumers can build a clean credit history from scratch.

However, some people still have their reservations about debt review even when it could dramatically change their lives for the better. This is primarily due to the many misconceptions about debt review that have gained popularity even as they are untrue. Let us debunk some of the most common myths about debt review.

The first, and arguably, the scariest one of these myths is the lie that if you go under debt review, you will not be able to get a job. Being under debt review shouldn’t stop you from obtaining your dream job. In fact, being under debt review can demonstrate to potential employers that you are financially responsible. In the absence of a debt review, your judgments and defaults will negatively affect your chance of being hired. However, a credit check that indicates that you are under debt review shouldn’t.

The same kind of morale applies when it comes to rentals. It is widely believed that going under debt review will prevent people from obtaining a rental contract. Again, the opposite is true. You cannot be denied access to rental property based solely on your debt status, so if you are deemed unfit, it will be due to some other factor like judgments, and defaults that reflect on your credit check. Also, since debt review is not a credit agreement, you can still rent a property if you are in the debt review process. Finally, there is no legal requirement that states that an individual under debt review cannot rent property or sign a lease.

The next one is one that is notorious for putting many people off debt review because really there are very few things scarier than long term commitments. While most people simply think that debt review has to take five years or more, the truth is there is no set time frame for debt review. The process can take as long as it needs to. In debt review, your debt counsellor will determine your repayment plan based on your finances and affordability. You could also shorten your repayment period by cutting back on your household expenses and increasing your affordability amount. In essence you can complete debt review within even one year. 

Finally, and most importantly debt review should not be taken in as a last resort. The effects of living in debt can be severe on both a financial and emotional level. Debt review was created by the NCA because it was intended to help struggling consumers avoid blacklisting and to protect important assets like homes and cars from losing ownership. If you are struggling to pay your monthly debt repayments and you have an income, you should consider the process sooner rather than later.

Founder and Debt Counsellor at National Debt Advisors Sebastien Alexanderson said Debt counseling is recommended as a debt relief measure for consumers who receive income before their assets such as houses, cars, and others are repossessed.

In addition to job losses, salary cuts, medical bills, rising fuel prices, food prices, and cost of living in general, consumers also end up overindebted as a result of overspending. The debt relief measure introduced by the National Credit Act (NCA) is aimed at assisting and rehabilitating over-indebted consumers from the dark pits of overwhelming debt.

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