Differentiating Between Different Debt Solutions

There are different methods to resolve problems that you may be experiencing with debt. Some that are mostly used are administration, debt review, and sequestration.

These are all solutions to help individuals solve their debt problems within South Africa, yet each one is unique and have a variety of different factors that must be considered before choosing one.

Solving a debt problem with administration, for instance, might be thought of as one solution people are unaware of.

Regardless whether it is implemented a lot or not, it still works for most people and involves reducing your debt installments while creditor providers all receive debt repayments every three months.

This process is also supported legally, while debt repayment terms get extended to make it easier for people to repay their debts.

Sequestration is another debt solution, which involves the process of selling one’s current assets, to repay or lower one’s current debt. During this period, the court appoints a professional to manage your money, which may present sequestration as one of the more expensive options, to solving debt problems

Debt review is regarded as a more known and preferred debt solution and is known as one of the best debt management solutions, which involves assisting consumers with providing appropriate solutions to their debt-related problems. This solution also involves a debt repayment plan, which can be extended, and interest rates reduced. This solution also involves a debt review company dealing with your creditors on your behalf.

Comparing administration, sequestration and debt review

  • Administration
    • Repayment terms get extended indefinitely
    • There is a 12.5% + VAT + distribution cost monthly
    • Interest rates won’t be reduced to less than 15.5%
    • Your payment might turn out to be deducted from your salary
    • This option is only available for debts less than R50,000.
  • Sequestration
    • This process is very expensive and legal fees will cost around R20,000.
    • Rehabilitation with this option may only occur after 5 years.
    • As a client, you’ll be forced to sell some or all your personal assets to repay your debts.
    • Sequestration isn’t an option unless it benefits the credit providers or is the last resort to resolve your debt problem.
  • Debt Review
    • This process involves restructuring your debt
    • As a client, terms regarding repayments to your credit providers will be negotiated by a debt consultant.
    • Repayment terms get extended.
    • Your banking fees will be reduced, and repayments are consolidated to a more affordable repayment plan.