Once clients apply you for debt review, they are protected from all new legal action.
Protection from legal action means that clients’ assets, like their house, their car(s), and things like special expensive jewellery will not be repossessed.
The debt counsellor will design a repayment plan which will be presented to creditors. The repayment plan will be based on what clients can afford to pay back. These are NOT the amounts that creditors require before clients enter the debt review process. The debt counsellor will also negotiate reduced interest rates. This implies that at the reduced instalment, and the reduced interest rate, short-term debt like credit cards, personal loans and accounts with retailers, can still be repaid in about 5 years.
After 5 years, when all the short-term debt is settled, the debt counsellor is obliged by law to issue a clearance certificate to the client, which will end the client’s debt review status. The client will then be able to incur new debt again.
The debt review process usually teach people some valuable lessons about accurate budgeting to ensure they do not fall into the debt trap again. The completion of the debt review process also helps to restore people’s self-belief and pride.