Are consolidation loans better than debt review?
- Taking out a debt consolidation loan does not guarantee that you won’t go into debt again. If you have a history of living beyond your means, you might do so again once you feel free of debt. As the saying goes: old habits die hard. Debt review will consolidate your debt repayments into a single monthly payment, reduce your interest rate and offer you legal protection against creditors wanting to take action against you.
- Debt consolidation loans also come with fees. Be sure to read the fine print and remember to ask about any and all fees, including those for making late payments or paying your loan off early.
- Consolidation does not always end up reducing the interest rate on your debt, particularly if your credit score is less than ideal, so be sure to compare your current interest rates with those of a consolidation loan. A consolidation loan won’t protect you from creditors taking legal action against you.
How do I know that I am over-indebted?
- You cannot keep track of which credit providers you are paying every month, and how much you are paying.
- You are unable to manage your monthly spending.
- You find yourself taking out loans to get through the month.
- You find yourself taking out new loans to pay old loans.
- The majority of your income (60% or more) is allocated to your debt.
- You have a judgement or default against your name.
How long does the debt review process take and how long will it be before I feel relief?
- This will depend on how much debt you have and how much you can afford to repay every month. Each case is unique, however the average time frame is 60 months.
- As soon as you officially become a client of DebtCare we start the process of restructuring your debt and negotiating with your creditors. On average this process takes about a week, after which you will start to experience the benefits of debt review.
Can I get credit or buy a house after debt review?
- There is no rehabilitation period applicable to you once you have settled all your debt, and you can comfortably re-enter the credit market once you have completed your debt review process.
Will the debt review flag stay on my credit report after I exit the process?
- Once you have settled all your debt, your Debt Counsellor will issue you with a Clearance Certificate confirming you have settled all the debt and are now debt free. Subsequently you can reapply for credit should you wish to do so.
I am divorced. My ex has not settled his/her debts for debt we incurred while married. Am I liable for his/her repayments?
- Let’s say a couple who owns a house together gets divorced. If the couple was married in community of property, the debt on the property is a joint debt. They will be jointly and severally liable. This means that each partner is not just liable for half the debt now that they are divorced, in fact, the bank can seek the full amount from either of them. The one spouse who is held liable by the bank would then have a claim of 50% of the debt against the other, but it would be his or her responsibility to collect that debt from their ex-spouse. Read more about debt and divorce here.
I didn’t include all my debt in the debt review process and now my creditors want to take legal action. Can they?
- It’s important to disclose all your debt to your debt counsellor so that they are aware. This includes old debt where creditors may not be actively pursuing you. If there is debt that is not included in your debt review process, your creditors are within their rights to take legal action against you.
If you have any burning questions about debt review speak to one of our qualified debt counsellors. Email firstname.lastname@example.org or call 0861 997 873.