#Adulting101: Approach debt review with caution

SA may have strong financial regulations that protect consumers more than many other places, but opportunists still can exploit those in financial distress. You may have heard of debt review, where a debt counsellor is assigned to liaise with your credit providers to negotiate a repayment plan without losing any of your assets.   

But beware: the long term restrictions are onerous, says personal finance expert Maya Fisher-French. Once you enter into debt review, which generally takes up to five years (but may take even longer depending on how much debt you have), you cannot apply for new credit, you cannot voluntarily withdraw from the process easily and you will be flagged at credit bureaux, but not blacklisted. Ouchie! Fisher-French warns that it’s easy to get caught in the trap of a debt counsellor because they often don’t share the Ts and Cs of the process. And thousands of people, who are under even more financial pressure because of the pandemic, are being targeted by call centre agents pushing the product on them.

WhatsApp has made the process even faster; the necessary documents are digitised and instantly generated. Consumers often sign up, thinking it’s just an assessment. But once they sign, they have triggered the debt review process, which starts within five days.

So a reminder: don’t sign anything without really knowing what you’re getting yourself into. A honey jar is sweet until you get your hand stuck in it. 😏

This article appeared as part of The Wrap, 26 August 2021. Sign up to receive our weekly updates.