What to Expect from the Debt Restructuring Process in South Africa
Many South Africans are struggling with mounting debt due to financial hardships. While careful budgeting can help, let’s face it — there may come a time when professional assistance is needed. Debt restructuring in South Africa may be the best solution for those overwhelmed by their financial obligations.
Basically, debt restructuring in South Africa is a planned approach to assist people who are finding it difficult to keep up with their debt. It offers a legal and official path for individuals to collaborate with a professional debt counsellor, who helps to devise a repayment plan that adjusts their existing debts.
Here’s what you can expect during a debt restructuring in South Africa:
Assessment of your financial situation
The first step in debt restructuring is assessing your financial situation. This means putting together a detailed list of all your debts, with each creditor’s name, their contact details, the amount you owe, and what you pay monthly. Your debt counsellor will also look at your income, expenses, and what you own to see just how strained your finances are.
Notification of creditors and credit bureaus
After they have sorted out your finances, the debt counsellor will inform your creditors and the credit bureaus that you’re undergoing debt counselling. This prevents creditors from taking legal action against you and marks the beginning of your debt repayment process. By alerting credit bureaus, your record is updated to show that you are actively working on a debt restructuring plan in South Africa, which can be beneficial in maintaining communication and transparency with all involved parties.
Debt restructuring plan
Next, your debt counsellor will help you make a debt restructuring plan. It can include suggesting changes like lowering your interest rates, extending the time you have to pay, or cutting down your monthly payments. The goal is to help you pay off your debts at a pace you can handle without overwhelming your finances.
Court approval
After you have your debt restructuring plan, it gets sent to a magistrate’s court, where it needs to be approved. Once approved, the plan becomes a legal contract between you and your creditors. Instead of paying each creditor separately, you will pay one amount each month to a payment distribution agency. This agency will then divide the money among your creditors as planned.
At Supercompare, we can connect you with a debt counsellor who can assist you with the legal process of debt counselling and help create a personalised debt restructuring plan. Fill out our online form now to reach out to our representatives.