Debt counselling vs debt review
Debt is an issue that affects many people, and it can be difficult to know how to manage it effectively. Two common approaches to managing debt are debt counselling and debt review. While these two approaches share similarities, they are also quite different. In this blog post, we will cover the key differences between debt counselling and debt review.
Debt Counselling
Debt counselling is a process where a debt counsellor assesses an individual's financial situation and provides advice and guidance on how to manage their debt. The debt counsellor will look at the individual's income, expenses, and debt obligations to come up with a plan that will help them manage their debt effectively.
The role of the debt counsellor is to provide support and guidance to the individual throughout the process. They will work with the individual to negotiate with creditors on their behalf and come up with a payment plan that is affordable for them. Debt counselling is an informal process, and there is no legal obligation on the part of the debtor to participate.
Debt Review
Debt review is a more formal legal process that is designed to help over-indebted consumers. If an individual is over-indebted and cannot meet their financial obligations, they can apply for debt review. The debt review process involves a debt counsellor working with a court-appointed debt counsellor to review the individual's debts and come up with a repayment plan that is affordable for them.
Once the debt review process has begun, the individual's creditors are legally required to stop all legal action against them. This means that the individual is protected from legal action while the debt review process is ongoing. The debt review process is more formal than debt counselling, and there is a legal obligation on the part of the debtor to participate.
Key Differences
The key difference between debt counselling and debt review is the formality of the process. Debt counselling is an informal process that is designed to help individuals manage their debt and avoid legal action. Debt review, on the other hand, is a more formal legal process that is designed to help over-indebted consumers.
Another difference is that there is no legal obligation on the part of the debtor to participate in debt counselling. However, if an individual is over-indebted and applies for debt review, they are legally obligated to participate in the process.
Conclusion
In conclusion, debt counselling and debt review are two different approaches to managing debt. Debt counselling is an informal process that is designed to help individuals manage their debt and avoid legal action. Debt review, on the other hand, is a more formal legal process that is designed to help over-indebted consumers. While these two approaches share similarities, they are also quite different, and it is important for individuals to understand the differences between them before deciding which approach is right for them.
If you have any questions about debt you currently have, please feel free to reach out to a member of the Libertine Consultants team. We are here to provide you with judgement-free support and advice.
Need advice? We can assist with that too! Submit your inquiry to us via email advisors@libertineconsultants.co.za and we will provide you with sound insights on the best way forward. In the meantime, keep an eye on our YouTube channel to get more practical advice on managing the financial stress of the pandemic.
