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A Fin24 user wants to know what the impact would be on his monthly instalments and his loan term should he decide to go under debt review. He writes:
If I go under debt review, I understand that it will reduce my instalments.
Does my balance also reduce without increasing my loan term? In essence, does it only prolong the agony?
READ: Debt review vs own arrangements with creditors
Renee Marais NCRDC1780, independent debt counsellor based in Pretoria, responds:
The original stipulations of the credit agreement remain the same. All debt counselling can change is the term of repayment and the amount of the instalment.
Debt review does not punish creditors. They have given you the credit on good faith and you have agreed to pay it back.
You also used the money, therefore, because you are having problems making ends meet currently, the banks and other creditors cannot be asked to reduce the outstanding amount.
About your question whether debt review, in essence, only "prolongs the agony", the answer is "yes and no".
Debt review safeguards your property until you are on your feet again. By reducing the monthly instalments to your creditors, it frees up some cash for you to be able to pay essential living expenses like school fees, housing, transport and food.
Debt review is not a way to finance your lifestyle or a way to skip paying off your debt. It might be a good idea for you to make an appointment with a debt counsellor in your area to talk about other options as maybe a budget restructure might be all you need.
Not all debt counsellors offer this service, but they can assist you.
ALSO READ: Worried about debt review and chance of a job
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