Certified financial planner Bruce Fleming gives us advice on which direction to take when in debt.
WHAT DOES BEING UNDER DEBT REVIEW MEAN?
Being under debt review means that you have appointed a debt councillor who has determined that you are over-indebted and debt stressed. They will inform your creditors and the credit bureaus, and draw up an interim repayment plan. This plan will be submitted to a registered payment distribution agency (PDA). During the first 60 business days, legal action can’t be taken against you in respect of your debts under review.
When all your debt is repaid, you’ll be issued with a clearance certificate from your debt councillor and they’ll notify the credit bureaus that you’re no longer under debt counselling. Debt counselling is not like blacklisting, and will be removed from your record once all debt is paid off.
WHAT TO DO WHEN UNDER DEBT REVIEW?
You should stick to the repayment plan and not put your debt review programme at risk. Remember that debt review is not a blacklisting but a protection that was put in place to assist people in debt. It will be removed completely once all debt is paid off.
WHAT NOT TO DO WHEN UNDER DEBT REVIEW?
It’s important to stick to your repayment plan, skipping a debt review agreement payment will annul the agreement. You should not use your credit cards or apply for unsecured loans. You need to bear in mind that you won’t be able to get a legal, registered loan while you’re under debt review.
CHANGES YOU SHOULD MAKE TO YOUR FINANCES DURING AND AFTER DEBT REVIEW
You should look at the debt review process as a way of turning your life around. It’s a proactive step in dealing with serious indebtedness. You should relook at your budget, not only while under debt review, but also into the future when all debt is paid off.
Once your debt is paid off, you should be careful to not go back into debt and start the cycle again. Use the surplus you now have (the money you were using to pay off your debt) to save. It’s far better to have savings than debt. A certified financial planner will help you stay on track with your financial goals.
