Under Debt Review? Know Your Rights?
Millions of employees celebrate Workers’ Day or May Day globally, an occasion to mark significant milestones in labour regulations, e.g. the eight our daily working quota or the implementation of a national minimum wage. At ezDebt, we advise employees to understand their labour rights and be aware of their purchasing behaviour, including any escalating debt, as many as still looking for a loan under debt review.
Don’t be afraid to seek help from a debt counsellor if you find yourself over-indebted and unable to pay the debt, or unsure about how a debt review process can help.
Do you need to go under debt review?
Debt review is a formal process that aids indebted employees to be able to make ends meet and pay back the debts to creditors via a structured repayment plan.
A debt counsellor is the only person who can look objectively at your income and debt situation and decide if you are over-indebted and can benefit from debt review.
If your salary is not enough to cover the debt or you have already missed a repayment, this is a good indication that you need immediate help.
Being under debt review means that the debt counsellor is appointed to negotiate with creditors on your behalf and agree on better repayment terms and lower instalments that you can afford.
What to do under debt review
Talk to your debt counsellor. Be honest about your debt concerns. The goal of the debt review process is to have a new finalised payment plan approved by the creditors so you can start paying off your debt as scheduled in the plan.
Resume payments once finalised and agreed. The debt counsellor will negotiate a monthly affordable repayment. Once the instalments are agreed upon, you can immediately resume paying up. The monthly payments are mandatory, and you have to carry them through; otherwise, you are placing the entire debt review agreement at risk!
Stick with the debt review process. Focus on paying the instalments under debt review and get yourself closer to being debt-free. A good reason to pull through and complete a debt review is to maintain a favourable credit record. Debt review does not stay permanently on your credit record. When all the agreed instalments are fully paid up, the debt review is removed from your profile.
Take control of your financial future. Take advantage of the debt review opportunity to get yourself closer to being debt-free. As an employee receiving a salary and incurring minimum or no debt, you will reduce the financial pressure for a loan under debt review and be able to use a more significant proportion of disposable income as you see fit for savings, investments, travel, education etc.
What not do to under debt review including getting whether you should get a loan under debt review
Do not skip any of the payments agreed under the new repayment plan. Missing just one payment attracts the annulment of your debt review agreement. Credit providers will take legal action if you do not continue with the instalments. It’s best to avoid this at all cost.
Thankfully, you do not have to worry about any legal action taken against you by creditors when starting the debt review process. This takes away some of the stress, but be careful. The grace period is 60 days. No creditors can threaten you during this time. Afterwards, non-payment leaves you vulnerable to litigation.
Don’t take on any further debt. As tempting as it may be due to the current low interest rates, avoid taking on more Loan under debt review while paying your existing debt. The point of debt review is to manage and settle current debts, not borrow more money, even on favourable banking terms.
Fortunately, employees are discouraged from applying for Loan under debt review – personal and business – and credit cards at registered credit providers and banking institutions. You are not allowed to apply for a legal loan under debt review.
What’s next after debt review?
Celebrate your newfound freedom. The debt review is a lifeline offered to over-indebted employees, with many benefits that go beyond reducing debt and improving your financial standing. You can now commit to becoming completely debt-free!
It’s critical to acknowledge that, as an employee, you will incur various debt commitment during your working years – starting with your home loan or vehicle financing – which may bring enormous financial stress.
It’s completely normal to deal with the reality of growing debt and seek debt counselling when you are over-exerting your income. The debt review process can also aid in avoiding severe legal action from creditors, such as asset repossession.
Most importantly, debt review will help ease those financial worries and put you back in control of your finances. Now that’s a reason to celebrate on 1 May, Workers’ Day!
Our professional ezDebt advisers can help you stay on track with debt repayments through a quick and affordable debt review. All our debt counsellors are registered with the National Credit Regulator (NCR). Get in touch at www.ezdebt.co.za