KNOW THE DIFFERENCE

Feeling overwhelmed by the number of debt relief options out there? Here’s a breakdown of the most popular three, as explained by Debt Busters: Debt Review, also known as debt counselling

or debt management, is a process where one’s repayments and payment terms are renegotiated with credit providers. We unpack it in greater detail throughout the article.

Administration is where the debtor’s instalments are reduced significantly, but the credit providers only receive repayment once every three months. The downside, however, is that the repayment terms are much longer, which could actually take decades to complete. Plus, the repayments are often deducted directly from one’s salary.

Sequestration is initiated by the credit provider, and involves the debtor selling off some of their assets so as to raise enough capital to pay off or decrease their current debt — to start this process, the debtor must at least offer 15% of what they owe. Additionally, this has the potential to become an expensive exercise as the court will have to appoint someone to manage the debtor’s money, and rehabilitation may only begin after five years.