Although both are classified as debt management tools that restructure your multiple debt accounts into a single, affordable repayment plan to reduce the stress of having to keep up to date with debt repayments, there are some important differences to be aware of.
- DEBT CONSOLIDATION
This is essentially another loan that covers debt up to R300 000.
You need a good credit score to be eligible to apply. While this might be tempting, it is important to note that you have NO legal protection of your assets during the repayment period, and your debt actually increases over time because of the high interest you’re paying on the loan. This means that in event of failure to meet payment, creditors can still take action against you.
- DEBT REVIEW
The programme entails a formal debt rehabilitation programme introduced by the National Credit Act in 2007, and regulated by the National Credit Regulator (NCR).
Its aim is to ensure fair practice to consumers who are genuinely struggling to make ends meet every month due to debt.
The programme covers an unlimited amount of debt, and your credit score is irrelevant - even those who have been blacklisted are eligible to apply.
Anyone who has a monthly income which puts you in a position to make a reasonable offer to your credit providers may apply.
There are no other upfront fees when applying for DEBT REVIEW
Your debt counselor's fees - which include a once-off restructuring fee plus legal fees are all included in your debt repayment plan.
Your first two to three restructured payments are collected to cover the restructuring and legal fees, and are payable when your debt review application is approved.
Like in any service industry, it is advisable to do your homework on the debt counselling firm you decide to approach, before deciding to sign up.
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