Debt Consolidation

Involved Parties in a Debt Review Exercise

Debt review is also known as debt counseling in the market place. This is part of the debt consolidation process where all debts of a consumer are put together as one lump sum to be settled for the consumer’s creditors.

A debt review is not a loan. It is a National Credit Act process with some criteria set for processing; these include an appointment of a debt counselor to the debtor for a debt consolidation process.

Role of debt counselor

The debt counsellor would advise the consumer on the required processes and procedures to be undertaken such as informing the consumer’s creditors of the consumer’s preference for a debt consolidation option. This would prevent the creditors from harassing the consumer for further payment until the agreed settlement is reached.

The debt review procedure does not allow the creditor to take further legal action against the consumer unless a prior summons was issued.

The counsellor handling the review case would assess the consumer’s debt size. If the consumer is heavily in debt where there is no excess income to pay off the creditors, the counsellor working on behalf of the consumer would make the necessary recommendation of a consolidation.

A debt review exercise would involve the consumer’s creditors to liaise with the debt counsellor on all official monetary matters of the consumer such as the amount owed and duration of payment.

It is the responsibility of the debt counsellor to draw up the most conducive payment schedule on behalf of the consumer for every creditor. The review considers the amount the consumer can afford to pay the creditors after deducting the monthly expenses.

Creditors’ response

In a debt review exercise, the consumer’s creditors may choose to accept or reject the counselor’s offer of repayment. Creditors are allowed to make a counter-proposal of the balance to be repaid. Such negotiations are common in a review exercise.

If the consumer’s creditors do not accept the proposed repayment amount, creditors may consider more serious actions on the consumer such as requesting the Court on Affidavit to make a possibly better debt repayment recommendation.

However, that alternative may be longer and more tedious for the creditors to collect the debt from the debtor. Hence, most creditors would accept the review offer and let the appointed debt counsellor handle all the necessary legal and tedious procedures as creditors wait patiently for the return of their money.

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