Debt review is a process specifically created to help consumers whose overall debt is too high for them to pay up every month and who are having trouble keeping up with their financial obligations.
Table of Contents
Loans for Debt Review Clients in South Africa
A debt counselor from the firm helping you with the debt review process will speak with your creditors on your behalf and work out payment plans, bringing your monthly payments down to a more manageable amount that you can afford.
However, as a South African citizen, getting a loan as a debt review client is an almost non-feasible process, and this is why we have come up with all you need to know about the loans for debt review process in South Africa.
Are there Debt Review Loans in South Africa?
Yes, although the National Credit Act stipulates that obtaining a loan while subject to a debt review is prohibited. This would be an example of reckless lending if a company gives out any loan to such a client.
However, people under debt review can still get some loans, but it will not be a long-term option, although it has yet to be fully supported by the NCA.
Also, you are already having difficulty meeting your present debt obligations if you are under debt review.
When you are a debt review client, it is neither legal nor responsible to be excessively indebted or to take on extra debt.
What next can one do to boost the chances of getting loans as a debt review client in South Africa?
How Can Debt Review Clients Boost their Chances of Getting Loan in South Africa?
As said earlier, one cannot take on further credit or debt while you are subject to a debt review.
However, a debt review client in South Africa should take note of the following as regards the debt review process:
- The first step to boost your chances of getting a loan is to ensure you clear off your debt review.
- The primary tactic employed during a debt review is restructuring debt repayments. Interest rates are renegotiated, and current repayment terms are modified to fit your financial capacity with the assistance of the debt counselor.
- As a result, the monthly repayment schedule is more reasonable, and the loan term is extended. Thanks to the debt review program, you’ll find it simpler to manage your bills, as you’ll only have to worry about paying one consolidated debt account.
- The NCA has put this in place to shield you from the relentless harassment that creditors typically subject underpaying clients to.
Once you’ve cleared all debt, you will then receive a debt clearance certificate.
What is a Debt Review Clearance Document
Your debt counselor will issue the debt review clearance certificate if you have paid off all of your debts following the terms of the debt restructuring agreement you signed.
The debt review clearance certificate must be obtained following the NCA once all unsecured debt has been paid in full, all mortgages and other comparable loan arrangements are current, and all debt counseling fees have been paid.
To prove that you’ve complied with the terms of the debt restructuring plan, creditors and credit bureaus are given a copy of the debt review clearance certificate.
Your credit history will be cleared of defaults, judgments, and debt counseling warnings, enabling you to apply for loans from reputable financial institutions again.
Loan Options for Debt Review Clients In South Africa
- Pawnshop Credit: Even though they are not always a good alternative for debt review customers or anybody else, for that matter, pawn shop loans are a quick way to get a loan in South Africa. You must bring a valued asset, like a TV or laptop, to a pawnbroker to receive credit. Your credit history or the knowledge that you are the subject of a debt review is unimportant to the pawnbroker.
- Title Loans: In South Africa, car title loans are the most typical kind of title loans. By taking this loan, you are essentially pawning off your automobile when you take out a car title loan in South Africa. The issue with these loans is that you frequently have to deal with shady loan sharks who will exploit your predicament.
A loan sum typically much lower than the worth of your car (25–50% of your car’s value) will be requested in exchange for the original car registration documents in your name. If you extend the payment period, you will pay more interest and fees and risk the lender repossessing your automobile.
3. Payday loans: The payday loan is another credit alternative for persons being reviewed for debt. As long as they can take your repayments from your paycheck directly, some payday loan lenders might not care if you are enrolled in debt counseling. It bears repeating that unscrupulous lenders are out to take advantage of you without considering the possibility that they can worsen your financial situation. Because of the increased interest rates on their loans, you will have less money to pay down your other debts.
If possible, prevent this, and make sure you have enough money to cover your essential costs and keep to your debt repayment schedule. You should complete your debt review so you can get a loan that is more legal and reliable.
Advantages of Debt Review
- It is one consistent monthly payment: Your debt will be reorganized and combined into smaller amounts when you enter debt review. This will make sure you have enough money to cover your living costs. After that, this sum will be given to a controlled payment distribution organization with a legal duty to pay your debts on your behalf.
- It has legal safeguards: You won’t need to be concerned about any legal letters or phone calls from creditors once you are subject to a debt review. The NCA provides legal protection against creditors for both you and your assets. Creditors might not bother you as a result of this. Your debt counselor will handle All communications with creditors on your behalf.
- You get out of debt comfortably: Your credit report will be marked at the credit bureaus once you are under debt review. So, once the debt review procedure is through, you can obtain more credit. This is an excellent approach to prevent further debt and begin concentrating on a future free of debt. If your circumstances have changed and you can demonstrate you are no longer over-indebted, you can end the process once you have paid off your debt.
What Drawbacks Does Debt Review Have?
The fact that you won’t be able to acquire new credit while your debt is being reviewed is a drawback many find frightening.
The fact that you cannot get out of debt by taking on additional debt works in your favor.
Even if getting a loan to pay off your debt and unexpected needs may seem significant, it will always be a short-term fix.
Consider debt review as a longer-term solution to assist you in getting your finances back on track.
Additionally, taking out another loan would worsen matters if you need help making all your payments on time.
Can One Apply For Loans In South Africa After Completing Debt Review?
Yes, you can apply for a loan after completing the procedure and receiving a certificate of debt review clearance.
A debt review is not an eternal punishment. It’s vital to remember that before doing so, you will need to gradually re-establish your credit score. This is because a debt review provides you with a new credit history.
This implies that you must first open a new account, such as a retail account, to gradually start rebuilding your credit score before you can apply for a new loan. After that, you can submit a loan application.
How to Contact Debt Review Lenders In South Africa
You can find lenders giving loans to debt review clients In Johannesburg, Durban, Pretoria, and other parts of South Africa.
You should note that these lenders are frequently unregulated private lenders, pawnbrokers, and loan sharks who don’t care whether they violate the National Credit Act, which forbids debt review clients from obtaining credit.
Also, most debt review lenders need to be more trustworthy and will offer loans with high fees.
Frequently Asked Questions
In South Africa, how long will someone be subjected to debt review?
The most extended period a person can be under debt review is 60 months (5 years), while the specific length varies from person to person.
Everybody has a different amount of debt and a different reasonable monthly installment they can make while still prioritizing their daily living expenditures, so there is no predetermined time because of this.
What should I avoid when my debt is being reviewed?
It’s crucial to follow your repayment plan while you’re being reviewed because skipping payments will result in the cancellation of the contract.
Throughout the process, you are not permitted to obtain further credit. It will guarantee that your loan is paid off completely, at which point your credit report will be wiped.
Is it a good idea to review my debt?
Yes, anyone finding it difficult to make their monthly payments is wise to consider conducting a debt review. You may put an end to sleepless nights wondering about how you will pay for everything.
Conclusion
So far, it has been established that if you wish to remain compliant with the law, you cannot obtain more credit while you are through a debt review.
Debt review clients’ access to credit typically comes with high fees and significant financial losses.
The best course of action is to finish the debt review application process and take steps to pay off your existing debt before applying for credit if you are currently under debt review and want to do so.