Debt Review for Managing Loan Burden

For debtors struggling to meet the payment obligations of multiple loans, debt review is one of the best options for reducing the debt burden. When a debtor applies for debt review, the debt counselor after taking into account the diverse pending dues of a debtor prepares a repayment plan that requires the debtor to make a single monthly payment to a registered payment agency. The payment agency then distributes the funds among the creditors. Eligibility for Debt Review Only private individuals who do not have sufficient finance to meet the monthly instalments of multiple loans can seek debt review. The debtor should disclose all credit cards and accounts to the debt counsellor. The debt counsellor only reviews credits listed in the National Credit Act, which includes credit card bills, loans, bond and vehicle agreements other than rental agreements. When you are under debt review, you are not eligible for further credits or loans. Best Time to Apply for Debt Review It is always advisable to seek debt review as soon as you realize that your monthly earning is not sufficient for meeting all your monthly loan payments. The longer you ignore debt review, the more time a creditor gets to issue a letter of demand. If a Summons is issued by a court, you can no longer include the particular account for debt review. Debt Review Process Debt review, also known as debt counselling, helps a debtor to manage his/her loan payment obligation. After reviewing the financial condition of a debtor, if the debt counselor is convinced that the debtor is burdened with debt, he/she draws an affordable payment schedule after consulting the creditors. Once all creditors accept the payment proposal, the recommendations need to be approved by a court order. During the negotiation phase, a creditor may reject the proposals of the debt counsellor or may offer a counter proposal. In the event of a disagreement between the creditor and the debtor, the debt counsellor requests the court to consider the recommendations and accordingly pass an order. Benefits of Debt Review There are several advantages of debt review. Once you are under debt review, your creditors cannot take any legal action against you for 60 days. However, a debt review cannot protect you from legal proceedings if a Summons has been issued before you approached a debt counselor for debt review.