I’m under debt review. I need money now. Can I get a loan? This is a question many South Africans ask when they’re under debt review.
The answer to this question is both yes and no. You’re not allowed to, but people often find ways to bypass the rules. To understand this completely, you need to understand the purpose of debt review.
What is the purpose of debt review?
In 2007, The National Credit Act (NCA) introduced debt review to help over-indebted South Africans cope financially. The process helps prevent consumers from being blacklisted and having to bear the consequences thereof.
Debt review, or debt counselling, will help you to pay off your debt at a lower monthly installment, so that you have more money available for living expenses.
Debt review is a rehabilitation process that helps you take control of your finances and secure a debt-free future.
The debt review process is ideal for consumers who are:
- Struggling to make ends meet
- Falling further and further into debt
- Unable to keep up with monthly debt payments
Why are you not allowed to apply for debt while under debt review?
Taking out credit while under debt review is against the law and doing so defeats the entire purpose of the debt review process.
Once you’re under debt review, major banks and lending institutions will not approve your loan application, as this will be seen as reckless lending.
If you are under debt review, the only way to take out an additional loan is to:
- Cancel the debt review process
- Borrow from a loan shark or other non-mainstream credit lender
Bare in mind that these options are very risky and should be avoided.
Seek advice from your debt counsellor before canceling your debt review application or before making more debt.
When can I take out credit again?
Once you have completed the debt review process and all your debt is paid off, you will receive a clearance certificate which is known as Form 19. Your debt counsellor will notify the credit bureaus that you no longer have any outstanding debt.
The credit bureaus are then legally required by the NCA to remove the ‘under debt review’ flag from your credit profile within 21 business days of being notified.
Once the ‘under debt review’ flag has been removed from your credit profile, you can take out credit again – responsibly of course.