So many people are worried about their credit record. My advice is relax and don’t worry about it, let me explain. Remember, while you are under debt counselling you have a negative debt review indicator on your credit record and you are not entitled to any further credit. By the time you have paid off your debts the negative listings added by your creditors may well have fallen off your credit record as the maximum data retention periods would probably have lapsed. You are also entitled to request your debt counsellor to issue a clearance certificate at the end of the debt counselling process. This certificate requires the credit bureau to remove any account listing where the debt was repaid during debt counselling. So, by and large all the negative listings should be removed from your credit record by the time you have emerged from debt counselling. It is important to note that having lived on a budget, without credit while under debt counselling, you should really avoid getting more debt once you exit debt counselling – your aim should be to remain debt free.
Written by Stephen Logan, Independent Consumer Attorney
Thanks for the great post and good advice Stephen. Honestly, it’s really help me a lot.
I was under debt review and most of my salary was going towards paying off the debt and increased every year since 2009. In 2011 I discovered that half of my original debt had actually increased to more than I was owing and I could not see how I was going to get out of this cycle, so I cancelled the debt review. Now I’ve been called by the bank and told if I don’t pay the arrears on my car (R105000) which they say accumulated since 2009, they are repossessing my car at the end of Jan-2012. Now it looks like I’m being penalised for ever being under debt review in the first place. When I cancelled the debt review I was not informed about this arrears issue. I just wanted to resume my normal instalments. Do you have any advice for me?
Dear Mary-Anne,
The mistake you made was to believe the figures about the outstanding balances and interest. When you are under review, you should ignore all the statements your creditors send to you and only work according to your payment-plan. Creditors do not make the adjustments on their systems according to your new payment-plan prior to the debt review being completed. The balances would have only been adjusted by your creditors once you have adhered to all the terms of your review.
When a debt review is cancelled, the original credit agreement is revived and the creditors are free to proceed to enforce their rights in terms thereof. That is why we urge consumers not to cancel without making prior arrangements with creditors. We often assist them to do so. First reach a written agreement with the creditor about the capitalisation of all payments in arrears and the resumption of the original installments prior to cancelling your review and losing your protection.
The only way to address the problem is by reaching an agreement with the bank, otherwise they will proceed with enforcement.
Hope this helps.
Can I request the statements from debt review from time to time? To check my payments
Dear Nomthandazo,
Yes you can request statements from your Debt Review company to check your payments towards your creditors.
Can you shorten the repayment period by paying and additional amount on top of the arranged.
I don’t want to pay-off debt forever, so would there be at any period during this arrangement a kind of settlement amount that you can requested from time-to-time from your creditors?
Dear Antonio,
The amount negotiated by your debt counsellor is a minimum amount and should at all times be paid. You have total freedom to increase payments. You may choose which accounts you would like to pay more on or settle at your own discretion.
Your settlement amounts should be evident from your debt counsellors statements. If not, you may request a settlement in terms of your court order and your DC should provide it to you as part of his/her service.
Hope this helps.
Hi! can someone help me, i have a very bad credit record, i’ve tryed many banks for debt consolidatio without any luck, can anyone refer me to maybe a company that can help me to consolidate all my debts. And i will pay back any amount that they need, i’m a profesional working for city of tshwane. My e mail lindosk@webmail.co.za
Hi Lydia,
One of our consultants will be in contact with you.
Regards
DebtSafe
I have a bad credit record, I want to get married soon and I dont want this to affect my soon to be husband. how can I be debt consolidated with him not being affected. Is there onother way of paying of my debt without the stigma of being under debt review
Dear Ayanda,
If you get married ANC then your debt won’t affect him and vise versa. Once you debt is repaid you can change your married status to COP at home affairs. Please note that one of the requirements to qualify for debt consolidation is you need to own a fixed property for more than 10 years. Herewith a comparison between debt review and debt consolidation:
There are a lot of different options available to the over-indebted consumer, and it may become difficult to get a clear picture of which is the best solution for your particular circumstances.
The lengthy discussions about debt consolidation versus debt review makes it even harder to decide which one is best. They are often mentioned in the same breath, but in reality the only way in which they are similar is that you have no access to new debt during the period of repayment.
Essentially the two processes differ significantly, as it’s set out in the comparison table below:
Debt Review
All types of debt are included, and you don’t need fixed property to be eligible.
One instalment is payable on the collective of your debt, and can be reduced by up to 50% of the combined total.
Immediate relief with regards to payments: reduced instalments are paid in month one already.
You are protected against legal action from creditors during the first 60 working days after application.
You are protected against blacklisting, as defined in the national credit protection act.
The process is voluntary and you may cancel at any time, should you feel that you are now in a position to repay your debt on standard terms and conditions of creditors.
Interest rates remain the same and may also be reduced in some cases.
Debt Consolidation
You will need fixed property to apply for this process.
Your debt is combined into a single loan, with one collective instalment payable, as calculated on the total amount.
Can take up to 3 months to register before reduced payments come into effect.
You are not protected against legal action from creditors at any stage during the process.
You are not protected against blacklisting.
It is a credit agreement and therefore the only way to cancel the loan is to complete payment thereof in full.
This is a very expensive type of loan with a high interest rate.
Please feel free to contact us at info@debtsafe.co.za or on 0861 100 999 for more information and assistance.
Regards DebtSafe