From the onset debt review may seem like big commitment that could alter the life of an average South African consumer indefinitely. However, think about when you sign a mortgage or take out vehicle finance – a consumer has no problem signing and agreeing to pay a premium for 5 years, or even 20 to 30 years. Taking on the debt requires as much consideration as deciding to undergo debt review.
Taking the initiative to manage your debts through debt review does mean that your life will change, but only for a while. As much as you had to budget to accommodate your payments when you committed to your debt agreements, a new type of budget and pledge is made between you and your creditors while under debt review.
These changes are only temporary though – debt review lasts a few years, and after that a consumer is only credit blacklisted under South African law for 5 years. The average period that a consumer is affected by debt review is 5-10 years depending on their repayment terms. Following that the entire slate is wiped clean, and consumer has proven to all parties involved, including the South African credit bureaus, that they have been successfully rehabilitated.
Other forms of debt management such as sequestration, administration, or bankruptcy carry longer consequences than debt review. In South Africa, a judgment can stay on your credit score for up to 15 years, and during that time no positive changes are being made to the way you spend your money.
South African consumers should consider debt review in the same positive light as they view other long term debt commitments – with the knowledge that is only temporary whilst bettering their lives indefinitely.
Article written by: Andrea van Tonder 03-2013