Debt Management

Debt Management

Struggling with debt? Let Credit Rehab help! We offer debt mediation and debt review services to make becoming debt-free a reality.

Debt Mediation

If you opt for debt mediation, a third party (usually an attorney) will help to mediate discussions around a more affordable repayment plan. Since debt mediation is not regulated by the National Credit Regulator, no mark will appear on your credit report.

How Does Debt Mediation Work?

To begin, your debt mediator will assess your income, expenses, and debt. The mediator will negotiate with creditors to reduce interest rates, extend repayment terms, or consolidate debts. When you and your creditor have agreed on terms, you’ll make repayments according to a contract that better fits your budget.

You’ll deposit funds into an attorney trust account, which is regularly audited.

Debt Review

Debt review is a debt help system regulated by the National Credit Regulator (NCR) under the National Credit Act (NCA). It’s a debt help system that aims to restructure a person’s entire credit profile, from credit card and store card debt to vehicle finance and mortgage debt.

How Does Debt Review Work?

First, you’ll complete Form 16, where you must list your debt, income, and expenses. Then, your debt counsellor will inform your creditors that you have applied for debt review and enter you into the debt help system. You’ll be protected from legal action like sequestration, judgments, etc.

After that, your debt counsellor will assess whether you’re over-indebted. If you’re found to be over-indebted, you’ll be issued with Form 17.2. Your debt counsellor will negotiate with your creditors for lower interest rates and reduced repayments to make your debt more affordable.

When all parties are satisfied with what’s agreed, your debt counsellor will approach the Magistrate’s court with the proposed agreements.

You’ll make monthly payments to a payment distribution agency (PDA), which will distribute payments to your creditors. Depending on how your repayment capacity, debt review could take three to five years.

Debt Review vs. Debt Mediation

Debt review and mediation are similar in that they’re both measures taken to restructure credit agreements and provide legal protection.

Here are the key differences between debt review and debt mediation are:

• Debt review is regulated by the NCR and debt mediation is not.
• Debt review leaves a mark on your credit record, debt mediation does not.
• Debt review is legally binding for creditors, debt mediation is not.
• Debt review has a fixed fee that debt counsellors may charge, debt mediation does not.
• Debt review uses a debt counsellor, debt mediation uses an attorney.
• Under debt review, creditors are prohibited from granting you credit.

When choosing between debt mediation and debt review, consider the amount of legal protection you would like and whether you would like to take out credit.

Whatever route you choose, Credit Rehab is here to help. Our vast team of expert debt counsellors and attorneys are well-equipped to provide you with comprehensive debt relief on your terms. Contact us today to learn more.