Economic pressure is causing many consumers to turn to credit cards or personal loans to make ends meet. Debt Rescue released a survey revealing that 40% of consumers in South Africa have confirmed they have too much debt with which to cope. Furthermore, 68% of South Africans mentioned they don’t have cash left at the end of the month.

Their CEO, Neil Roets, explains that petrol hikes, high unemployment, a real decline in household income and increasing food prices are some of the contributing factors to this rather dire outlook.

“South Africans are unable to generate savings, do not have funds to fall back on in dire circumstances and as a result, they borrow. This is a very dangerous situation to be in,” Roets elaborated.

It is for this reason that many consumers over-indebt themselves and thus seek the lifeline of debt review/counselling. This blog will explain what debt review means and what the implications thereof are.

What does it mean to be under review?

If consumers find themselves unable to pay off debt obligations, they can apply to undergo review. The client and an assigned debt counsellor will meet to assess the financial situation, and plan out an affordable repayment plan. This plan will allow consumers to pay off debt while still meeting living costs.

The decision to apply for review prohibits the application for a new credit line until the existing debt has been settled.  It’s also important to note that The National Credit Act does not allow any consumer to withdraw from the debt review process once that application has been approved.

Can you still take out a loan under review?

Unfortunately, not. When a consumer is under review, the National Credit Regulator informs all credit bureaus. This prevents a client from entering into any new loans until all existing debt is repaid and settled in full.

How can you save money?

Numerous practices can be easily implemented to live a debt-free life. These range from paying more than is required on an outstanding loan payment, reducing monthly expenses, and using other methods of getting cash in a flash like selling your items or getting a loan against your valuables.

Come chat to us about your loan needs and should you want to get a credit report visit a Cash Converters store to get your credit check today!