When struggling with mounting debt, many people seek help in the form of debt review or debt counselling. While this may seem like a fool-proof solution to financial distress, it is essential to understand the realities of the process before diving in. The Cold Hard Truth About Debt Review is that, while it can be a wonderful tool that helps many people, very often people are not aware of the drawbacks of the debt review process when signing up.
In this blog post, we will explore the cold hard truth about debt review and debunk some common misconceptions.
- Debt review does not make your debt disappear
Debt review is designed to make your current financial obligations more manageable by distributing them over a longer period. This process does not eliminate your debts but rather rearranges them, allowing you to make smaller monthly payments. While this may provide some relief, it is essential to remember that your total debt remains the same and will take longer to repay.
- Debt review does not guarantee protection from legal action or summonses
Enrolling in a debt review program does not automatically protect you from legal action or summonses from your creditors. While it may lower the risk of such actions, creditors are not always legally obligated to halt their pursuit of repayments during the review process. A notable mention is legal action which was commenced before the debt review started.
- Debt review does not guarantee lower interest rates or consolidation of debt
Many people mistakenly believe that debt review automatically results in lower interest rates or debt consolidation. This is not the case. While debt review may help you negotiate more favourable terms with your creditors through the offices of a debt counsellor, there are no guarantees that your interest rates will be lowered or your debts consolidated.
- Getting out of debt review is harder than going under debt review
Once you have entered into a debt review process, it is not a simple task to cancel or reverse the arrangement. In most cases, cancelling debt review entails legal action through the courts. Be sure to fully understand the implications of debt review before committing to the process.
- Debt review prevents further credit
While undergoing debt review, you will be unable to obtain further credit, even for small transactions like cell phone accounts. This restriction is put in place to help you focus on repaying your existing debts and prevent you from falling further into financial distress.
- Debt review is a long-term commitment
Debt review extends the period of repayment, often significantly. This means that you will be committing to a long-term plan that may last several years. While this can make your monthly payments more manageable, it also means you will be in debt for a more extended period.
Debt review can be a helpful tool for those struggling with overwhelming debt, but it is crucial to understand the cold hard truth about the process. Be sure to weigh the pros and cons carefully and seek professional advice before committing.
If you have already committed to a debt review process and have second thoughts, contact us to find out whether you are eligible to have the debt review uplifted.