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What accounts can be placed under debt review?

by | May 26, 2022 | Personal Finance

More often than not economically active individuals will find themselves having to go into debt at some point in their lives. Generally, debt starts when our spending exceeds earnings, and we start living beyond our means. The reasons for this can be a variety of things, from ignorance to absolute necessity.

The National Credit Act (NCA) introduced the idea of debt review to the market under the National Credit Act 34 of 2005 in 2007. It was brought in to help consumers overwhelmed by their debt obligations overcome their problem and take back control of their lives. When you go under debt review, your Debt Counsellor negotiates lower monthly instalments with your creditors so that you are able to afford your all your household expenses while paying off your debt. In terms of the NCA therefore, it is your legal right to have your debt restructured to payment amounts that you can actually afford.

The NCA also outlines certain accounts that are excluded from the debt review process and those that can be included. According to Founder and Debt Counsellor at National Debt Advisors, Sebastien Alexanderson, debt review accounts include all credit agreements in which money is loaned and interest is charged over a period of time with the expectation of repayment. This is with the exception of accounts wherein which legal action has already been taken.

Secured debt, such as mortgages and vehicle debt as well as unsecured debt like credit cards, clothing accounts, and short/medium-term loans can all be included under debt review. Both private and commercial vehicle debt can be added under debt review, including secured debts containing balloon payments.

In terms of excluded accounts, according to the NCA, these are accounts such as school loans/student loans; emergency loans; public interest credit agreements; pawn transactions; and incidental credit agreements such as doctor’s bills and service accounts. Having said that, however, our debt counsellors at NDA can assist clients where possible if all parties consent to have their account included under debt review. We would need to conduct an assessment with you to determine the best solution to your debt problem.

If you are overwhelmed by your monthly debt obligations, you are not alone. Research done by the University of Stellenbosch Business School (USB) review, shows that over-indebtedness is more common than most people realise and the causes vary from interest rates, inflation, and house price increases among others. The bottom line is, despite people having different reasons for borrowing, the root cause of over-indebtedness is increased poverty. While these issues have been worsened by Covid-19 pandemic effects on the economy, the reality is, these problems have always been there and many people over the years have found themselves having to battle the devastated effects of over-indebtedness on their quality of life.

As one of South Africa’s leading debt counselling companies, National Debt Advisors has been assisting consumers overwhelmed by their financial obligations take back control of their lives for almost a decade.

Give us a call, and let us help you better your financial situation today.

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