Do a Cost Benefit Analysis before you go under debt review

because you could pay much more for your debts under debt review than you would, if you simply paid for them yourself.

Over 10,4 million South Africans were blacklisted before COVID-19. It is not ideal to be blacklisted but you can pay off the debts and clear your name afterwards. Similarly when you go under debt review, you would be listed as a consumer under debt review on your credit report. You can remove the entry once you have settled all your debts and your debt counsellor has given you a clearance certificate.

With interest rate hikes, food, petrol and the cost of living being so high, it appears that some people are going under debt review without gathering information beforehand. They then regret and start asking questions after they have already signed up. This article is supposed to help you make an informed decision. As an example, there are upfront fees to be paid to your debt counsellor and legal fees. We read that debt restructuring fee is capped at R8 000 for individuals and R9 000 if you are married in community of property.

Some key points to know before you go under debt review

  1. Ask your debt counsellor for their registration number with the National Credit Regulator (NCR) and confirm with the NCR that they are a debt counsellor in good standing. This is to ensure that you are not being scammed
  2. How long will you be under debt review for? Your debt councilor should be able to estimate this for you
  3. What will it take for you to get out of debt review? E.g. do you have to pay all of your debts to be allowed to get out of debt review? What if you have paid the smaller debts but you still have a car loan to pay?
  4. What are the upfront costs of going under debt review? How will you pay for these?
  5. What are the monthly costs of being under debt review? How will you pay for these?
  6. What is the worst that could happen if you don’t go under debt review?
  7. Is it better for you to sell your car than go under debt review?

We also suggest that you read the following blog posts on an engineer with a Masters degree who was under debt review for six years.

We also recommend that you read pages 23 – 31 in the book From Debt to Riches: Steps to Financial Success to get a better understanding of debt review and also tips on what you could do before you go under debt review.

Share this knowledge with your loved ones