Debt Review: It Saved You, But Now What?
Debt Review is an absolute lifesaver when your finances feel out of control and you’re drowning in debt. It gives you the space to breathe and get back on your feet. But life moves on, right? Maybe you got a big promotion, an inheritance came through, or you just managed to tighten your belt and sort things out. If your circumstances have changed for the better, you shouldn’t be trapped. The big question is: Can you get out of Debt Review early and fully take back the reins of your financial life? The good news is, yes, you can. Here’s a simple look at the options available to you in South Africa to finally wave goodbye to the process.
Debt Review: A Lifeline, But Not a Forever Trap
Debt Review is a legal process where a debt counsellor negotiates with your creditors to lower your monthly repayments. This can give you much-needed breathing room to get back on your feet financially. However, it’s important to understand that Debt Review isn’t a permanent solution.
So, When Can You Get Out?
The National Credit Act (NCA) outlines two main scenarios for exiting Debt Review:
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Freedom After Full Payment:
This is the simplest route. Once you’ve completely paid off all the debts in your Debt Review plan, your debt counsellor should issue you a “Clearance Certificate” within seven days. This certificate removes the Debt Review flag from your credit report, signifying you’re no longer under Debt Review.
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Demonstrating Financial Fitness:
Even if you haven’t paid everything off yet, you might still qualify for early exit if you can prove to the court that:
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- You’re no longer “over-indebted” (meaning you can comfortably manage your remaining debt).
- You have no outstanding arrears on your current repayment plan
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This route involves applying to the Magistrates Court to have the Debt Review Court Order rescinded. The court will assess your financial situation and determine if you can realistically handle your debts without the Debt Review program.
Exiting Before a Court Order:
If you haven’t reached the court order stage yet and your financial situation has improved, you might be able to terminate the process early. Like the “financial fitness” option above, you’ll need to convince the court you’re no longer over-indebted and can manage your debts independently.
Important Considerations:
- Professional Help: Exiting Debt Review, especially through rescission, can involve complex legal procedures. Consider consulting a lawyer specializing in debt review matters to ensure you follow the correct channels and present your case effectively in court.
- Credit Rating Impact: Debt Review can negatively impact your credit score for a period. However, exiting the program successfully and managing your finances responsibly can help rebuild your creditworthiness over time.
Taking Control of Your Finances:
Debt Review can be a valuable tool, but it’s important to understand your exit options. If your financial situation has improved, you have the right to explore ways to break free from the program and regain control of your finances. Remember, responsible debt management is key to a healthy financial future!
Need Help Navigating Debt Review?
At BBP Law Attorneys, we understand the complexities of debt management. Whether you’re considering Debt Review, seeking to exit the program, or facing other debt-related challenges, we can help. Contact us today for a consultation and let’s discuss your options.
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