What is debt counselling?
Debt counselling or debt review refers to a regulated and legally protected process that assists people with outstanding debts, to pay back their loans and become debt-free. It does so by devising an affordable payment plan that both the creditor and the debtor agree to.
For anyone who finds themselves in a deteriorated financial position due to the accumulation of debts, the debt counselling process can give an opportunity to revive their financial position.
Being under debt review means that you have officially appointed a debt counsellor who has declared you to be over-indebted.
Debt counsellors are certified professionals, and discussing your financial situation with them can greatly relieve your debt-related anxiety and fears. These professionals work in correspondence with credit providers to devise an affordable payment structure for you. The payment plan has to be agreed upon by both parties. Once the payment structure is determined, you can start paying back to the creditors in accordance with the revised payment plan.
What are the effects of being under debt review?
When you appoint a debt counsellor, they send a notice of the same to all your creditors and credit bureaus. Once the legal process starts, you will have to prepare yourself for the effects that you will start to notice.
The first and the most noticeable effect of being under debt review is that you will not be able to borrow more money. This is to prevent any addition to your accumulated debt so that making payments does not become difficult for you. You will be eligible to take loans, only after you have paid off all outstanding debts.
Moreover, your credit profile gets flagged once the process starts and your credit score becomes zero. Also, your debt repayment term gets extended to a certain period, meaning you will be paying off more debt in the long run over a longer period.
How to get out of debt review?
The only way to get further credit or to start a business after you have been put under debt review is to stick to the payment program and get out of any outstanding debt. Since 2015, the legislation prohibits debt counsellors from withdrawing clients from the debt counselling process. They can do so only on account of non-compliance and non-cooperation from the debtor. It is important to note that we issue our clients with a clearance certificate, which is also given to all their credit providers and credit bureaus.
What happens after debt counselling removal?
After completing the payment program set by your credit repair company or NDCSA, you will receive a clearance certificate, stating that you are no longer indebted. The credit providers will be notified of the clearance certificate by the debt counsellor and the NCR system will be updated. Within 21 days of the notification, the ‘under debt review label’ will be removed from your profile, and you will be (a) eligible to apply for new credit, and (b) be able to leave the debt counselling program before full repayment is possible, provided you show affordability to maintain your original monthly instalments.