Is Debt Review an Act of Insolvency
There are specific requirements that will determine if a debtor enters into an act of insolvency. Debt Review is different from insolvency because you are not expressing to any of your creditors that you’re unable to repay your debts. Debt Review works by restructuring your debt obligations so that your creditors are still being repaid, even though the timeframes and monthly payment amounts differ from your original contract.
According to South Africa’s Insolvency Act s8 (g), a debtor enters into an insolvent act when directly providing a creditor with written notice that they are no longer able to pay any of their debts. When it comes to Debt Review, you as the debtor do not have any communications with your creditors, since all the negotiations to reduce your monthly instalments with banks and credit providers are handled by a qualified Debt Counsellor. During the process of Debt Review with the help of Debtco Group, you do not have to worry about your credit report reflecting insolvency.
Applying for Debt Review is a great way to take charge of your financial troubles, as it gives your budget the balance that it needs. Our team works according to your affordability assessment to present you with a new Debt Repayment Plan so that you can honour your creditors in the best way possible, while still being able to live a comfortable life and afford your family’s needs. After Debt Review, you’re issued a Debt Clearance Certificate and can apply for credit once more. This is not the case for acts of insolvency, where it is more complicated to attain credit, even after rehabilitation.
During the legal, National Credit Regulator-approved Debt Review process, you are not declared bankrupt, which is a necessary step during sequestration where insolvency is the case. Another big difference is the effect on your credit score once you’ve finished Debt Review, versus an act of insolvency. After successfully completing Debt Review, this should be cleared from your name with only your payment history remaining for two years. In cases of insolvency, this can reflect on your credit score for anywhere from 5 to 10 years.
If you are unsure of how to move forward with your debt problems, we can advise you on the best approach for your unique financial circumstances. The first step is to decide that you’re ready to improve your life. There are so many benefits to Debt Review, from financial relief to the protection you receive from your creditors. Our team is committed to helping you leave your debt issues behind for good.