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Debt Consolidation and Credit

Questions & AnswersCategory: Credit ApplicationDebt Consolidation and Credit
Janine asked 2 years ago

Hi I would like to know, should I consolidate my debt, I have a personal revolving loan, clothing account and credit card I would like to settle.  Once settled would I still have access to these? As I would like to settle but not close?

1 Answers
Carien Kruger Staff answered 2 years ago

Hi there

Thank you for your question.

We help over-indebted South Africans through a program called debt review. Debt review is not a consolidation loan.

With consolidation loans you only shift your debt from one place to another. Most people will not qualify for a consolidation loan. There are two ways in which you can consolidate your debt. If you own a property and have liquidity in the property; meaning that your property is worth more than what you still owe the bank. You can use that to finance your other debt.

The other way to consolidate is to take out a consolidation loan at the bank. This typically has a limit of R50 000 and the consumer must be able to afford the instalment on top of their existing debt instalments. For most people R50 000 is not enough anyway and the interest and fee charges are also extremely high. With this consolidation loan your creditor will do an affordability assessment, and will only give you the loan if you can afford double the amount of your debt.

Unlike consolidation loans, which have very strict requirements (and at the end leaves you with more debt) debt review restructures your credit obligations to an affordable, consolidated, repayment plan.

Please note that you will not be able to qualify for credit during the debt review program. The National Credit Act prohibits you from incurring any further credit while you are under debt review.  Which makes sense since credit is what caused most of our clients’ debt.  The reason for this is that whilst under debt review your budget is calculated and precisely allocated to your current debt obligations and other living expenses.

For more information about the benefits of debt review please click here.

Kind regards.