Will you be Blacklisted if you’re under Debt Review?

Debt review, or debt counselling, was introduced in 2007 by the National Credit Act (NCA) to help prevent South African consumers from being blacklisted. Once you’re under debt review you will be protected under the NCA which will legally protect you from being blacklisted. 

If you are blacklisted and you decide to apply for debt review, your credit report will most likely already be negatively affected and may take a few years to restore to normal. 

But unlike being blacklisted, debt review will be removed from your name as soon as you’ve settled all your debt. 

Once you’ve paid off all your debt you will receive a clearance certificate and your name will be cleared from the debt review process. As soon as your name has been cleared from the debt review process you can start rebuilding your financial situation from scratch. Your credit score will be reset back to zero. 

So no, you won’t be blacklisted if you’re under debt review. Instead, debt review protects you from being blacklisted. But what is the difference between debt review and blacklisting? And how do they affect your financial situation? 

What does it mean to be blacklisted? 

Technically blacklisting does not exist anymore, but the term is still widely used to describe an “impaired” credit record. In other words, it’s a negative mark on your name caused by defaulting on repayments, for example. Your credit report allows creditors to see exactly what your credit behaviour looks like. And based on your repayment history, alongside other factors, a creditor will grant you access to credit based on your financial history. 

Although blacklisting does not technically exist, a bad credit history will hurt your financial situation. 

What is the difference between debt review and blacklisting? 

Debt review is a legal process that helps over-indebted South Africans become debt-free. The process was introduced by the National Credit Act (NCA) to prevent consumers from being blacklisted. 

The difference between blacklisting and debt review is that blacklisting is an industry term that could cause implications with credit providers. Whereas debt review is a legal process put in place to help over-indebted South Africans. 

How does debt review and blacklisting affect your credit score? 

Creditors will refer to your financial situation as being blacklisted as long as you have an impaired record. Your credit report will be flagged to indicate that you have missed payments and have accounts in arrears. You may have this flag on your credit report for a number years even after you’ve settled all your debt accounts. You will have to rebuild your credit score from a poor standing. This may be difficult to do and will take time to rebuild.

When you’re under debt review your credit report will be flagged. This flag will indicate to creditors that you are under debt review which will prevent you from applying to credit until your debt is cleared. 

Once all your debt has been settled you will receive a clearance certificate and the flag will be removed from your credit report. Your credit report will be reset back to zero and you can start rebuilding your credit score from scratch. You will be able to apply for credit as soon as you’ve received the clearance certificate. There will be no long term negative implications once you’ve completed the debt review process. Creditors will perceive you as a responsible consumer who has taken action to get their financial situation back on track. 

Conclusion

You will not be blacklisted if you’re under debt review. If you’re under debt review, creditors will view your decision as an attempt to restore your financial situation. Although your credit report will be flagged to prevent you from making more debt, your credit report will not be negatively affected. Once you’ve received your clearance certificate you are allowed access to credit again and rebuild your financial situation responsibly. 

If you’re struggling to afford your debt repayments, debt review may be an option for you. Leave your contact information in the form below, and one of our friendly consultants will get back to you as soon as possible.