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Dispelling the myths about debt review – part 1

When it sounds too good to be true, it probably is.

It is the best method to get you free of debt. In fact, we hand out 2 000 debt-free certificates to Octogen customers every year. Although it is really important to separate fact from fiction before committing to it. We follow on from our recent blog post with the truth behind common misconceptions and more information for anyone interested in this life-changing process.

Paying off debt is not an instant solution.

Consumer debt is normally obtained over a few years with a repayment term of an average of 60 months for unsecured debt. This means that the process of becoming debt-free (through debt counselling) will take some time.

Debt review is often a shared responsibility.

If you are married in community of property (COP), then both parties have to apply for debt counselling. While under debt review, you or your spouse cannot obtain any new debt. The reason for this is that it is a solution to get you debt-free.

You should not always expect a reduction.

There are a number of debt counsellors that offer a 60% reduction in instalments. Firstly, no debt counsellor can guarantee a reduction in interest or fees upfront. Secondly, any reduction in instalment without an interest rate and fee concession will automatically increase the current repayment term. Thirdly, if payments are reduced by 60% the repayment will not even cater for the interest. No credit provider or magistrate will accept this repayment plan – simply because the proposed payments will never repay the debt.

Debt review is a serious commitment.

When you apply and your application is accepted, a repayment plan is approved. The process then has to be completed. When the debt is repaid, you receive a clearance certificate. If you quit halfway, your debt will not be repaid as planned. To get out of debt review you have to repay the debt. In a way, this is like sequestration. Once sequestrated, a consumer cannot just decide that they no longer want to be sequestrated. To exit sequestration, you have to go back to court to ask permission. In debt review, this is easier because once you have repaid your debt, you are debt-free and can apply for the court order to be lifted.

‘Debt traps’ do not happen with Octogen.

A so-called ‘debt trap’ only happens when a debt counsellor implements a repayment plan that does not cover the interest and fees. This causes debt to increase, not reduce. In cases where the proposed repayment is not enough to repay the debt, it is normally an indication that debt review is not a solution for that consumer and should be avoided. We make sure it is the right choice for you.

If you think debt review is the right choice for you, start by checking your own financial wellbeing by taking our quick and easy quiz.

You should stop receiving calls from credit providers.

A major issue is the ongoing harassment of consumers who are under debt review by credit providers. They often suggest you quit and enter into a direct arrangement with the credit provider. This action is illegal. When this happens, consumers blame debt review, but the real culprit is the unscrupulous credit provider who encourages the consumer to quit and ruin their debt counselling. At Octogen, we do everything we can to manage the full cooperation of your credit providers.

Myths about Debt Review