Are You Bad at Debt Review?
You Might Not Be As Good As You Think
Debt review is one of the best tools available to help South Africans take control of their financial situation.
Debt Review helps lower your monthly debt repayments, protects you from aggressive collections, and gives you a clear path to settling all your debts. When done properly, debt review brings relief, peace of mind, and eventually the prospect of becoming debt free.
But not everyone makes it to the end. Some people fall out of debt review early, not because the system failed them, but because they unknowingly worked against their own debt review.
Some people are just bad at being in debt review.
Are you one of them?
Well, if you’re in debt review (or thinking about starting) you need to know the red flags that could signal danger.
Let’s look at 10 signs that you might be sabotaging your own success (and what to do instead).
1. You take too long to send your Debt Counsellor information
When you start debt review you need to send a lot of documents back and forth between your Debt Counsellor and Attorney.
If your Debt Counsellor asks for documents or updated details and you delay, it slows down your progress. This can result in missed deadlines, or incorrect proposals going to your credit providers. If you don’t send your attorneys a signed and commissioned affidavit for use at court (saying you know about and agree with the debt review) your whole court case can collapse and be thrown out of court.
RATHER: Respond quickly. Even if you’re busy, prioritise your debt review. After all, it’s your financial future at stake!
2. You don’t actually look at, or stick to your budget
A budget is your roadmap through debt review. Ignoring it is like driving blindfolded. You’ll end up in trouble.
If you overspend or don’t track your expenses, you’re at risk of running out of money for essentials or your monthly payment.
RATHER: Try to stick to your budget. Review it monthly, and make changes with your Debt Counsellor if you find you can’t stick to it in its current form. It is a living thing and can’t be ignored.
3. You are meant to save but you are not doing so
When your Debt Counsellor helps you make up your initial budget (and helps you review it from time to time) they will be sure to include something towards saving.
Especially for annual costs like school fees or car services. They may even suggest saving enough to cover an insurance claim excess. If you skip this saving, those big annual expenses will wreck your monthly plan.
RATHER: Save something. Even if it’s a small amount, build that habit. Your future self will thank you.
4. You move or change jobs but don’t tell your Debt Counsellor
Major life changes affect your finances. Even if you hope they won’t…they will.
If you change jobs or move house and keep it to yourself, important legal documents could go to the wrong place, which means you might not even be aware of something super important.
RATHER: Keep your Debt Counsellor, attorneys, PDA and credit providers up to date with your work & home address to avoid any nasty surprises.
5. You change your mobile number or email address and don’t tell the Debt Counsellor
If your Debt Counsellor can’t reach you, they can’t help you. Missed emails or calls might mean missed deadlines or important updates.
Your PDA needs to send you a monthly statement about your payments. If they have old numbers or email addresses you will lose track of your progress.
RATHER: Always keep your contact details current. It really helps keep your plan on track and ensures you can track your progress.
6. You Don’t Bother To Check Your PDA Statement
During your debt review, your PDA (Payment Distribution Agency) sends you statements to help you keep track of your debt repayments.
Not checking them means you won’t notice any possible errors or mix-ups (they can happen).
RATHER: Compare your PDA statement to your bank statements. There will be some minor balance differences (your Debt Counsellor will explain why) but if something looks drastically off, speak up early.
7. You know about an upcoming challenge and do not talk to your Debt Counsellor in advance
Even in debt review, “life happens”: medical bills, retrenchment, or car trouble.
A lot can happen over the span of 60 months*. But not warning your Debt Counsellor ahead of time means they can’t help you make a plan.
RATHER: Talk to your Debt Counsellor. If you contact them early enough then they can often approach your credit providers to negotiate some sort of temporary change to your payment plan. That small step can protect your entire debt review.
*Most debt restructuring plans are set out over 60 months these days. Not all, but most.
8. You short pay on your Debt Repayment
Before debt review, credit providers were lucky to get any payment at all. So, short payments don’t seem like a big deal.
But even though paying less than the full amount each month may seem harmless, it breaks the agreement with your credit providers (and your court order).
‘It could give greedy credit providers the chance to duck out of the debt review’
It could give greedy credit providers the chance to duck out of the debt review. Even if that doesn’t happen, short payments can throw off the plan and the differences can add up over time.
This can result in disappointment later, when you thought certain accounts would be paid off but because of extra interest and fees, they still have money outstanding. This can delay paying off the next account. It can cause a domino effect, messing up your plan many months later.
It also sends a clear message to the credit providers: that you don’t take the new arrangement serious.
RATHER: Live within your budget and pay the full planned amount, or talk to your Debt Counsellor if you see trouble coming.
9. You miss a debt review payment and expect the credit providers not to mind
Debt review is a legal process with a court order setting out what you have to pay, and what the credit providers must accept.
It keeps the credit providers from playing dirty, but it also means you have to pay each month. Skipping a payment can cause your whole debt review to fall apart.
Credit providers might terminate their participation and take new legal action. Just because you may have missed payments in the past before debt review, and it seemed nothing happened, you are now bound by the court order. So, no messing around.
RATHER: If you’re in trouble, speak to your Debt Counsellor before missing a payment (never afterwards).
10. You blame Your Debt Counsellor for the actions of credit providers or collections agents
When you begin debt review, all those nasty collections calls, sms, WhatsApps, and letters will dry up (not instantly). It will be a huge relief.
But it does not mean that none of your credit providers or their external collections agents won’t do something weird. It is important to note that your Debt Counsellor doesn’t control credit providers or collection agents.
‘credit providers and collections agents can and do make mistakes’
Some people don’t realise that credit providers and collections agents can and do make mistakes. And when something strange happens, they might make the mistake of blaming the Debt Counsellor.
RATHER: If something goes wrong, talk to your Debt Counsellor instead of blaming them. They can often sort it out, but only if you work together in good faith.
Don’t Fall Into These Traps
Did you spot anything you might need to work on?
Well, the good news is that each of these red flags is preventable. Debt review works best when you stay involved, stay honest, and stay in touch with your Debt Counsellor, PDA and attorneys. They’re there to help but only if you keep them in the loop.
If you’ve already fallen into one or two of these habits, it’s not too late. Fix what you can, you’ve come this far. Don’t let small mistakes cost you the chance to become debt free.
After all, you don’t want to be bad at debt review.
