South African creditors can be among the most bloodthirsty when it comes to late payments and debtors who default. There seems to be little sympathy in the industry if a consumer is unable to pay their debts promptly. Although a credit agreement is a binding contract that comes with obligations, creditors when increasing instalments, or attaching interest for arrears do not consider the human element.
Consumers are only human, and often time emergencies can drain funds. A sudden medical expense, or a broken down car can zap cash away before a consumer can find more money to pay their debts. Most South Africans are living month to month, and do not have savings built up to cover unexpected expenses, often actually relying on more credit to do so.
Debt review provides protection for consumers who are suddenly unable to pay their dues. An application for debt review creates an umbrella over a consumer until such time that their counsellor completes negotiations with their creditors and sets up a revised budget. This is usually settled within 60 days, and the consumer resumes payment, but in more realistic terms in compliance with their available finances.
The protection afforded by debt review is not infallible, but it is the best protection a consumer can get without causing them drastic asset and financial losses.
The legislation surrounding debt review is relatively new to South Africa, but it has already made a marked difference in the way that creditors and debtors converse in a financial crisis. It does not put up a wall of legalities between the two parties, but instead it humanises the consumer to the creditor and allows them provide a new way of paying their debts with the help of a skilled professional.
Article written by: Andrea van Tonder 03-2013