What is debt review and how does it work?

by , 07 November 2014

If you are buried in debt and feel like there is no way out, it's time to seek real solutions to your problem. Not being able to handle your debt can be extremely stressful, so it's a good idea to seek counselling from a debt advisor.

Debt review is the process through which a financial advisor performs a financial assessment and determines the best methods of managing and paying off the debt. While debt review is performed, legal action cannot be taken against you.

A debt counselor can assist you in paying off your debt by paying less interest over a longer period of time.
 
When you’re under debt review, lenders know that you cannot afford to pay your monthly instalments and that you can’t afford any more credit.
 
How does debt review work?
 

First of all, you need to find a debt advisor. The advisor will the determine the level of debt, will create a monthly budget, and will work to enable you to repay your debt in full.
 
The debt advisor will contact your credit providers and the credit bureaus and tell them that you are under debt review. From that point onwards, the creditors will not be allowed to take legal action against you for the following 60 days, provided that they haven’t already done so.
 
Then, the creditors can agree to allow you to pay less interest to assist you in paying off the debt. The debt advisor will then help you establish a budget and determine the amount to be paid to creditors on a monthly basis.
 
While you’re under credit review, you cannot apply for credit or use any form of credit, as this would only increase your existing balance.
 
You should not undergo debt review if you are not committed to paying off your debt. There will be many sacrifices to make and you will have to reduce expenses and put all your savings into paying off the debt.

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