Skip a debt review payment

Debt review, commonly referred to as debt counselling in South Africa, offers assistance to those grappling with overwhelming debt. Individuals can seek guidance from a debt counsellor who assesses their financial situation. If it’s determined that they are over-indebted, the counsellor engages in negotiations with creditors to formulate a more manageable payment plan, alleviating the burden and ensuring a mutually agreed-upon solution between the debtor and creditors. Regular and timely payments are crucial under debt review, as they showcase your commitment to settling your debts and foster trust with creditors. Missing a payment can jeopardize the entire process, causing creditors to question your dedication and potentially resort to legal action. Such oversights can also lead to increased debt due to additional interest and fees, setting off a chain reaction that complicates future payments. Hence, it’s imperative to maintain consistent payments while undergoing debt review.

Key Takeaways

  • Debt review, known as debt counseling in South Africa, provides a structured approach to managing overwhelming debts.
  • Missing a payment under debt review can result in immediate financial consequences, impact your credit score, and lead to legal repercussions.
  • Consistently missed payments can strain relationships with creditors and have a significant emotional and psychological impact.
  • Termination from the debt review process can expose you to the original, often less favorable, credit terms and potential legal actions from creditors.

Understanding the Process

So, how does this process come together in South Africa? Let’s break it down step-by-step:

Seeking Assistance: The first step is acknowledging that you require help. When you realize that your debts are spiraling out of control, you approach a registered debt counsellor.

Assessment: The debt counsellor then closely examines your finances. They review your income, your monthly expenses, and all your outstanding debts. This evaluation determines whether you are genuinely over-indebted or if there are alternative methods to help you manage your finances.

Negotiation: If you are indeed over-indebted, the real work commences. Your debt counsellor negotiates with your creditors. They discuss new payment terms, which may involve reduced interest rates or extended payment periods. The aim is to decrease your monthly payments to a level that you can manage.

New Payment Plan: Following successful negotiations, the debt counsellor presents you with a new payment plan. This plan consolidates all your debts into a single monthly payment. Instead of juggling multiple payments to various creditors, you make one payment to a payment distribution agency, which, in turn, disburses the funds to your creditors on your behalf.

Adherence to the Plan: With the new plan in place, it’s your responsibility to ensure those monthly payments are made. Consistent and regular payments are the cornerstone of a successful debt review process. Over time, as you adhere to the plan, you’ll find yourself gradually breaking free from the chains of overwhelming debt.

Remember, debt review isn’t a quick remedy. It’s a journey, but with the right guidance and unwavering commitment, it’s a journey that can lead you to a place of financial stability and peace of mind.

The Immediate Impact of Missing a Payment

Notification from the Debt Counsellor

If you fail to make a payment while under debt review, your debt counsellor will be notified. They actively monitor payments and will reach out to you if a payment is missed. Their primary objective is to offer support and guidance rather than to point out errors. They will endeavor to comprehend the reasons behind the missed payment and may provide budgeting advice or explore the possibility of renegotiating terms with your creditors if necessary.

Financial Impact on Your Monthly Budget

Missing a payment may appear to be a minor oversight, especially if you believe you can compensate for it the following month. However, the repercussions on your finances can be more significant than anticipated. Here’s what could transpire:

Increased Debt: The most immediate consequence is that your debt does not decrease as intended. In essence, you take a step backward on your journey to achieving a debt-free status.

Additional Interest and Fees: Depending on the agreements reached with your creditors, failing to make a payment can lead to additional interest or even penalty fees. This translates to a higher overall cost in the long term.

Budget Disruption: Your monthly budget relies on a delicate equilibrium between income and expenses. Missing a payment in the context of debt review disrupts this equilibrium. You may find yourself short of funds for other essential expenses, contributing to increased financial strain.

Potential for Further Missed Payments: When one missed payment disrupts your budget, it can trigger a domino effect. It might become challenging to make subsequent payments, including those for other bills. This slippery slope can quickly lead to more financial complications.

Effects on Your Credit Score

How Credit Scores Are Computed

Your credit score serves as a financial report card, revealing to lenders how dependable you are in handling and repaying debt. In South Africa, credit bureaus aggregate data concerning your financial behavior, encompassing your punctuality in bill payments, the total debt you carry, and the duration for which you’ve maintained open credit accounts. These factors amalgamate to generate a numerical representation – your credit score.

  • Payment History: This scrutinizes whether you settle your bills promptly. Missing or delaying payments can exert an adverse influence on your score.
  • Debt Level: This factor pertains to the total amount of debt you owe. Approaching the maximum limits on your credit can set off warning signals.
  • Length of Credit History: The longer you’ve managed open credit accounts, particularly if handled responsibly, the more favorable it can be for your score.
  • Types of Credit: A variety of credit types, such as retail accounts, credit cards, or loans, can be advantageous.
  • New Credit Inquiries: Every time you request new credit, an inquiry is generated. An excessive number of inquiries in a brief span can diminish your score.

The Prolonged Ramifications of Missed Payments

A missed payment within the context of debt review doesn’t merely represent a short-lived setback; it can leave enduring imprints on your credit score. Here’s how:

Negative Marks: A missed payment can culminate in a negative entry on your credit report. This entry can linger on your report for an extended period, serving as a constant reminder to potential lenders of the instance when you failed to meet your payment obligations.

Reduced Score: Your payment history plays a pivotal role in your credit score. Thus, when you miss a payment, especially on multiple occasions, your score can plummet. This decline can impair your prospects of obtaining new credit in the future.

Elevated Interest Rates: Possessing a lower credit score can result in elevated interest rates if you are granted new credit. Lenders may perceive you as a greater risk and, as a consequence, may impose higher interest charges.

Challenges in Securing Loans: Whether it’s a mortgage, auto loan, or personal loan, lenders invariably scrutinize your credit score. A diminished score resulting from missed payments can make it more challenging to secure these loans, or you may receive less favorable terms.

Legal Repercussions

Implications of Breaching a Debt Review Agreement

When you enter the debt review process, you essentially enter into a fresh agreement with your creditors. This agreement, frequently formalized through court orders, delineates the revised payment terms that both you and your creditors have mutually consented to. Thus, when you miss a payment, it transcends a mere oversight; it constitutes a breach of that agreement.

Loss of Legal Safeguards: One of the key advantages of being under debt review is the legal protection it provides. Creditors are prohibited from pursuing legal action against you for debts encompassed within the review. Nevertheless, if you breach the contract by missing payments, you jeopardize this protective shield.

Reversion to Original Terms: In some instances, failure to adhere to the newly arranged payment plan can prompt creditors to revert to the terms of the original contract. This implies they can demand the full monthly payment, rather than the reduced sum negotiated under debt review.

Potential Legal Actions from Creditors

Should you consistently miss payments and exhibit no intention to rectify the situation, creditors may opt to take decisive action. Here’s a rundown of possible scenarios:

Summons: A creditor may issue a summons, a legal document serving notice of their intent to take you to court regarding the unpaid debt.

Judgment: If the court case progresses and you are found liable, the court can issue a judgement against you. This judgement represents a formal declaration by the court affirming your indebtedness to the creditor. It constitutes a detrimental entry on your credit report and can persist there for several years.

Garnishee Order: Matters can escalate further. In the event that you still fail to make payments following a judgement, the creditor can apply for a garnishee order. This order empowers them to deduct funds directly from your salary to satisfy the debt. It serves as a last-resort measure and can inflict severe financial hardship.

Asset Seizure: In extreme cases, especially if the debt is substantial and other remedies prove ineffective, creditors might contemplate seizing your assets. This implies they can take possession of and sell items you own, such as your vehicle or even your residence, in order to recover the money owed.

» Read more: Debt counselling pros and cons

Strained Relationships with Creditors

How Trust Erodes in Financial Matters

Trust is a vital component of financial relationships, and it operates on a reciprocal basis. When you and your creditors initially agreed to the terms within the debt review, there existed a mutual understanding: they would grant you more lenient payment terms, and in return, you would commit to making those payments consistently. However, with each missed payment, this trust gradually deteriorates.

Doubts About Commitment: Creditors may begin to question your genuine commitment to settling your debts. They’ve made concessions on their part, and missed payments can make them second-guess whether those concessions were justified.

Reluctance for Future Negotiations: In the event you encounter future financial hardships, a history of missed payments can dissuade creditors from being as open to negotiations or offering assistance. They might ponder, “Why should we extend help if the prior agreement wasn’t honored?”

The Challenge of Renegotiating Terms

Suppose you face another unexpected financial hurdle and necessitate the renegotiation of your payment terms. If you have consistently missed payments in the past, this process can grow significantly more challenging.

Higher Hurdles: Creditors may demand more rigorous proof of your financial hardship. They will want assurance that you genuinely require assistance and aren’t attempting to evade payment.

Less Favorable Terms: Even if they agree to renegotiate, the terms may not be as advantageous as before. They could offer smaller reductions in payments or shorter grace periods.

Loss of Benefits: Some creditors provide benefits for consistent payments, such as reduced interest rates or waived fees. If you’ve missed payments, you may not be eligible for these benefits in future negotiations.

Constructing and preserving a solid rapport with your creditors is paramount. It extends beyond the present moment and is about establishing a foundation of trust to fall back on if you encounter challenges in the future. Making regular payments, even if they’re smaller than originally agreed upon, demonstrates good faith and can play a pivotal role in nurturing a resilient and enduring relationship.

The Snowball Effect of Accumulating Debt

How a Single Missed Payment Can Trigger Multiple Consequences

It’s tempting to believe that a solitary missed payment won’t have a substantial impact. However, in the realm of debt, things can rapidly escalate. Here’s how:

Accumulated Interest: When a payment is skipped, the unpaid amount doesn’t remain stagnant. It continues to accrue interest. Consequently, when the next month arrives, you’re not only liable for the original amount but also the additional interest.

Compound Interest: This is where the situation can become intricate. Compound interest implies that you’re paying interest on your accrued interest. Thus, if you miss multiple payments, the amount you owe can balloon at an alarming rate.

Increased Debt Load: As these missed payments and accumulating interest mount up, your overall debt load expands. This can make it even more challenging to regain your financial footing and return to a stable state.

The Exponential Growth of Interest and Fees

Beyond the principal amount and interest, there are further financial consequences to consider:

Late Fees: Numerous creditors impose fees for late payments. These fees can accumulate swiftly, particularly when you’ve missed multiple payments.

Higher Interest Rates: Certain agreements contain provisions that enable creditors to elevate your interest rate if you fail to make payments on time. A higher interest rate means that you’ll be repaying your debt at a slower pace.

Extended Repayment Period: With the addition of these extra fees and interest, the time required to settle your debt can be prolonged. This implies that you’ll be burdened with debt for an extended duration.

Potential Termination of Debt Review

Criteria for Termination from Debt Review

Debt review is a structured process aimed at assisting individuals in regaining their financial stability. However, it’s not a one-size-fits-all solution, and there are circumstances where someone may be removed or terminated from the program. Here are the typical criteria for such termination:

  1. Missed Payments: Consistently failing to make payments is a primary reason for termination. The debt review process relies on individuals making regular payments as stipulated in the new agreement. If these payments are not made, it indicates a lack of commitment to the process.
  2. Voluntary Withdrawal: If you believe you are in a better financial position and can manage your debts without the need for debt review, you can voluntarily withdraw. However, this usually necessitates settling a significant portion, if not all, of your outstanding debts.
  3. Breach of Agreement: Apart from missed payments, other breaches, such as taking on additional credit without notifying your debt counsellor, can lead to termination.

Repercussions of Being Removed from the Program

Being terminated from the debt review process is not just an administrative change; it carries several repercussions:

Loss of Legal Protection: One of the significant advantages of being under debt review is the protection it offers against legal action from creditors. Once terminated, this protection is revoked, and creditors can take legal steps to recover their money.

Credit Record Note: While under debt review, your credit record will include a note indicating this status. If terminated from the program before clearing all your debts, this note remains, making it challenging to access new credit.

Return to Original Agreements: The renegotiated terms under debt review are invalidated upon termination. This means creditors can revert to the original terms of your credit agreements, which might include higher interest rates or less favorable conditions.

Potential Legal Action: As mentioned, without the shield of debt review, creditors can pursue legal avenues to recover their money. This could involve facing court judgments, garnishee orders, or even asset repossession.

Termination from debt review is a significant matter. If you find yourself struggling to keep up with payments or facing challenges that might lead to termination, it’s crucial to maintain open communication with your debt counsellor.

Ways to Prevent Missing a Payment

Setting Up Automatic Payments

One of the simplest ways to ensure you never miss a payment is by automating the process. Thanks to today’s banking technology, it’s easier than ever to establish this system:

Direct Debits: The majority of South African banks offer direct debit services. This enables you to grant your bank permission to automatically transfer a predetermined amount to your creditors on a specific date each month. By doing this, you eliminate the risk of forgetting to make a payment.

Scheduled Transfers: If you’re not comfortable with direct debits, another option is to schedule monthly transfers. Using your bank’s online platform, you can arrange recurring transfers to your creditors. Simply select a date, ideally immediately after your payday, to ensure sufficient funds in your account.

Payment Reminders: If you’re hesitant about automatic transfers, at the very least, set up payment reminders. Many banking apps allow you to configure notifications for bill payments. This way, even if you’re executing the transfer manually, you’ll receive a reminder when it’s time to pay.

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Budgeting and Financial Planning Tips

Beyond automation, a proactive approach to your finances can also help prevent missed payments. Here are some budgeting and planning tips to consider:

Track Your Expenses: Before you can effectively plan, you need to understand where your money is going. Over the course of a month, meticulously document every rand you spend. This will provide a clear overview of your spending patterns.

Create a Budget: Drawing from your tracked expenses, develop a budget. Allocate portions of your income to different categories, including essentials like rent and groceries, debt payments, and savings. Endeavor to adhere to this budget as closely as possible.

Emergency Fund: Life is unpredictable, and unforeseen expenses can disrupt your budget. To safeguard against this, start building an emergency fund. Even a small sum set aside each month can serve as a buffer against unexpected costs.

Review and Adjust: Your financial situation is dynamic, not static. It’s prudent to review your budget every few months. Make necessary adjustments for any changes in income or expenses, ensuring you always have sufficient funds for your debt payments.

Seek Financial Advice: If you’re uncertain about constructing a budget or require more advanced financial planning, consider seeking advice. Numerous organizations offer complimentary financial counseling, providing expert guidance on managing money and debts.

By taking a proactive and organized approach, you can establish a financial environment in which missed payments become a thing of the past. While it requires effort and discipline, the peace of mind it brings is unquestionably worthwhile.


Navigating the complexities of debt can be a daunting journey, but understanding the intricacies of the debt review process in South Africa can make the path clearer. While missing a payment is not ideal, it doesn’t signal the end of the road. With the right knowledge, proactive steps, and open communication, it’s possible to rectify such missteps and continue on the path to financial stability. Remember, the goal of debt review is to provide a lifeline, a structured way to manage and eventually overcome debt. By staying informed, committed, and seeking guidance when needed, you can make the most of this process and work toward a brighter financial future.

Frequently Asked Questions

Can I re-enter the debt review process if I’ve been terminated?

Yes, you can re-enter the debt review process even if you’ve been terminated before. However, it might be more challenging the second time around, as creditors may be more hesitant due to the previous termination. It’s important to approach the process with a clear plan and commitment to sticking to the new terms. Seeking guidance from a reputable debt counsellor can also help facilitate the re-entry process.

How many missed payments before my credit score is affected?

Your credit score can be affected by even a single missed payment. Credit bureaus closely monitor payment behaviors, and any deviation from the agreed-upon terms can have a negative impact on your credit report. However, the severity of the impact may vary based on the total number of missed payments, the duration, and other individual credit behaviors.

Are there any grace periods for late payments in debt review?

Typically, there isn’t a standard “grace period” for late payments under debt review. The terms agreed upon with your creditors specify when payments should be made. However, some creditors may have internal policies that allow for a few days of leeway before considering a payment late. It’s always best to communicate with your debt counsellor or the creditor directly if you anticipate a delay in payment.

Can I make up for a missed payment in the subsequent month?

Yes, you can make up for a missed payment in the following month. If you realize you’ve missed a payment, it’s advisable to rectify it as soon as possible. However, keep in mind that making a double payment the next month may strain your budget. It’s essential to plan accordingly and, if needed, adjust other expenses to accommodate the increased payment.

How can I seek help if I’m struggling to keep up with my payments?

If you’re finding it challenging to keep up with payments, the first step is to communicate with your debt counsellor. They are there to assist and guide you through such challenges. They can offer advice, help adjust your budget, or even renegotiate terms with creditors in certain situations. Remember, the goal of debt review is to assist you, so don’t hesitate to seek help when needed.

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