Many people struggle with debts and wonder if there is a way to get out of these debts. If you have sleepless nights just thinking of how difficult it is to pay and get over your debts, then debt rescue may be an option you want to consider. This will help you sleep better because it gives you a way forward. But what exactly is debt rescue, and does it work? Please keep reading to uncover more details and understand why this is the way forward for anyone that needs to get their debt situation in order.
Understanding What Debt Rescue is
Debt rescue refers to the financial service provider who works on rescuing people from debt. The company is known for its role in debt counseling and generally debt management. South Africans know that they can count on this company to help them get back on track as far debts are concerned. Besides that, the company also offers other services, including insurance products and sequestration. So you can count on the company to help you with insurance, financial planning, and debt management. Most people turn to debt rescue to get back on track financially.
Debt rescue as a company was established back in 2008 and had its headquarters in Kempton Park, South Africa. You can always tell that people need its services, considering the huge social media following the company has. Debt rescue review has been one of the most practical solutions South Africans have used to help them pay their debts successfully and use lower installments. One does not have to feel overwhelmed about the loan or debt they have but can work out a way of fixing this gradually. It can achieve this through the different services it has on offer. These include:
- Debt Counselling
- Employee debt solutions
- Short term insurance
- Credit Life Insurance
How Does Debt Rescue Work?
The National Credit Regulator (NCR) introduced the aspect of debt rescue as a way of supporting over-indebted consumers to manage their finances better and to get back on the path of honoring their payments in a better manner. Therefore, it is safe to say that debt rescue involves a debt counselor helping clients better budget and pay back their debts at an affordable rate. The debt counselors discuss with your creditors negotiating a better deal on your behalf. In the end, one pays fewer monthly instalments at a reduced rate than before.
The heavy burden of debt is lifted, and you can tackle it perfectly since you are paying less each month. When working with such a company, you get to have a personalized repayment plan. This way, you can comfortably repay your debts and still have enough cash left to cater to your daily or ordinary expenses. The debt rescue company you work with will ensure that the creditors accept the repayment plan they come up with. Once done, these creditors cannot take any legal action against you as a customer because the national credit act will protect you. You do not have to suffer or battle stress because of debt when you have a company that can help you rework the debt and get back on track with your life.
Debt Review Process Explained
Debt review is a process where a debt counselor can assess and restructure all your debt repayment plans. This means that you will have a new monthly debt repayment plan you need to adhere to. The good news is that the new repayment plan will be less burdensome as your lifestyle needs will have been considered since the aim is to help ease the pressure that comes with debt ownership. Usually, this process affords you some legal protection, and all forms of communication with your creditors shift from you to being handled by your debt counselor. They will ensure everything runs smoothly and that you do not have to deal with the pressure.
Getting Started on Debt Review Process
The first thing is to establish the debt counseling company you want to work with. There are several service providers you can choose from. Make sure you focus on their ability to help you get back on track by ensuring they have a good reputation. You should check their social media pages and other platforms to see other clients’ feedback on them. The best debt review company will have positive backing from satisfied clients. More importantly, make sure the NCR has registered the debt counselor you use. It helps to review the company’s credentials on the NCR website to ensure you are not making a costly mistake. Once you are comfortable with the debt counselor you have chosen, the company will proceed first to review your current budget. They will also consider your income, living expenses, and the debts you have to pay.
Telling that You are Over-indebted
If your current debt requirements exceed half your income amount, you are most likely over-indebted. This means that you are a potential candidate for the debt review process lest the debts start overwhelming you and you cannot manage your lifestyle because of too many debt repayment commitments. It is also possible that you may be unable to meet most of these repayments if your repayment schedule is not reworked.
The role of your debt counselor is to pull up a credit report to help check your loan balances and the current interest rates to find opportunities for reduction. Once they have figured it out, they will negotiate with the creditors and come up with a better deal for you.
The company will review your details and develop a formal budget that you can afford. Once this is done, you will be sent the copy and asked to sign formally accepting the new terms. This form is referred to as Form 16, and it contains details of your income, necessary expenditure, and declarations of your formal application for debt review. The forms come with fees that cover the application administration and legal processing charges. Note that these fees will be out of the monthly commitment repayment plan. Your creditors will also have to agree to receive payment from the third month because payments will go to the debt counselor for the first two months.
Follow-up After signing Form 16
Once the signed form is received back by the debt counselor, they will also request to have your bank statements and ID as this is what they will send to your creditors. Next, all your creditors will receive a notice as a Form 17.1, informing them of your debt reassessment process. The notice will also request the creditors to provide a formal certificate of balances (COBs). This will serve as a confirmation of actual amounts owed to them as per their records.
As a way of proving your debt application has been submitted, it is at this stage that you will be registered at the National Credit Bureaus (NCR) Debt Help database. This submission will provide a protective cover that ensures you are legally protected against any creditor’s legal action.
When the debt counselor receives the COBs five days later, they can then proceed to wrap up their assessments and determent your level of over-indebtedness. This will prove that you cannot meet your current financial debt obligations as things stand currently.
The debt counselor then proceeds to issue a new declaration in Form 17.2, which is what outlines the new repayment plan. This new proposal will contain significant interest rate reductions that will make your loan repayments more affordable. All your creditors will then be informed, officially declaring that you are under a new debt review. One thing you should note, though, is that you will no longer be able to access any new credit to avoid getting back to a situation where you have more debt than you can handle.
The new proposal will have a list of all your credit providers displayed. It will also show the current outstanding lances indicated in the debt counselor’s COBs. Besides that, it will also include the monthly installments you are to pay and the newly negotiated interest rate repayments.
The counselor and creditors will negotiate a new repayment plan, and once they reach an agreement, that is then channeled to the National Consumer Tribunal for a consent order. If some creditors do not agree with the new proposals, the matter is transferred to the magistrate court.
The Review Process is Legal
Once the debt review process is complete, you have to commit to making the agreed payments every month. This is a legally binding agreement, and breaching the agreement has its consequences. While the debt counselors do not handle the money transfer, they use the Payment Distributions Agency (PDA), which then distributes your payments to the creditors until you can clear all the outstanding debt. In most cases, the duration of your payment depends on the debit balance, but it never exceeds five years. Contact your debt counselor immediately if you experience repayment constraints, as they will issue a change of circumstance report, shielding you from any negative consequences.
Note that many unsecured loans come with life insurance if something happens. Once you have cleared the repayments under the new plan, your debt counselor will issue a clearance certificate sent to all credit bureaus in South Africa, certifying that you are now debt-free.
Debt Rescue Calculator
You can use the online calculator from Debt Rescue to help check the current state of your financial status. You can access the debt calculator here.
How much does Debt Rescue charge for its services?
All Debt Counsellors’ fees are regulated by the National Credit Regulator (NCR) and are included in your affordable debt repayment plan. Your monthly Debt Review payment amount is specific to your situation and how much debt you have in total. All Debt Counsellors are permitted by the NCR to charge certain fees which include:
- A once-off Application fee of R350(excl. VAT).
- A once-off restructuring fee equal to the first month’s payment which is limited to a maximum of R8000 (excl. VAT) for a single application and R9000 (excl. VAT) for a joint application.
- A monthly aftercare fee of 5% (excl VAT) of the Debt Review payment, with a maximum of R400 (excl VAT)
Debt Rescue Contact Details
The Debt Rescue HQ is located in Kempton Park on the outskirts of Johannesburg.
85 Friedman St,