When you are under debt review, you have some pending debts and want to pay them all. It is the main reason- you cannot take out financial services like loans. Otherwise, doing this can double your problem because your credit file is flagged to credit bureaus.
Logically, you are already fighting against your debts- your loan application will force lending institutions to check your credit. Once they do that, they will know that you are already under debt review. Then they will reject your loan request under the guidelines of the National Credit Act.
Some unscrupulous loan sharks are willing to help you with funds. But you need to know how much you will have to pay than the usual charges. Also, you will have debt accumulation leading to further problems. To know more, MoneyStar® shows you everything below:
What is debt review?
Debt review, also known as debt counseling or consolidation, is focused on rehabilitating you if you are under too much debt ratio.
Debt review is a fantastic solution for South Africans who are indebted and struggling to pay back their debts. The National Credit Act (NCA) is a debit rehabilitation program introduced in 2007 to help indebted people of South Africa and restore their financial well-being.
Loss of income, unemployment, or recklessly taking loans are reasons for being over-indebted. In such circumstances, debt review is the best option in South Africa.
You need a debt counselor approved and registered with the National Credit Regulator to get the debt review. Once you get it, your debt counselor assesses your current outstanding debts and provides a structured repayment plan.
The best thing about debt review is that you can get relief from your creditor’s threats about taking legal action to sell your property, such as a car or home.
What meant by loan for under debt review?
Taking out a loan is impossible when going through the debt review process. The fact is that before lending institutions give you loan approval, they prefer checking your credit history.
When they come to know, you are under a debt review. Then, this doesn’t allow them to help you further financially. It happens only when a debt counselor finds out you haven’t been able to pay off your debts after taking out loans. In such a case, they find you the best way to settle your debts.
Your debt review status shows on your credit history that lending institutions might be at risk if they consider your loan application. This process is for your betterment in removing debts and improving your score.
What are the advantages and disadvantages of debt review?
The coin always has two sides that nobody can ignore another one. In the same way- debt review has some advantages and disadvantages that you should always consider when going through it.
Very often, people don’t know much about it, which causes them to lose proper information about what they want. So, looking for both sides of the debt review before proceeding further is better.
Some advantages and disadvantages of debt review:
Advantages:
- Relief in one payment: You can get debt relief in one single flexible payment.
- Living expenses manageable: You will be able to manage your daily based expenses while you are under debt review.
- Legal safety: You won’t be getting any calls or messages from your creditor under debt review.
- Easy to come out: You can easily come out of your debts with easy repayments with no hassle.
- Repossession relief: Your assets won’t be repossessed when you are under the process of debt review.
Disadvantages:
- Eligibility is hard: You can try for debt review, but there is no guarantee for qualifying.
- Citizenship is needed: You need to be the South African’s citizen only for a debt review.
- Needed steady income: Either you or your spouse should have a stable income to qualify for debt review.
Can you get a loan while under debt review?
Yes, you can get a loan while you are under debt review. Or else you can go for shark loans that many lenders offer in your province. But there is a condition- you must cancel the debt review process, then only you can get loans.
These types of loans are costly for you and risky because traditional lenders charge higher interest rates than actual interest rates. So, it would help if you thought about these options one more time before you find them the only option to meet your needs.
How to get a loan under debt review?
The good news is- despite you being under a debt review, you can still arrange money whenever you have needed for that. You can’t get the loan approval when you are under debt review.
But the fact is- your expenses won’t stop chasing you until you arrange money. Arranging money during this time is undoubtedly one of the challenges, but you can try something else.
Following types of loans:
- Pawnshop loans: You can apply for pawnshop loans by purchasing valuables in exchange for money. But you must repay their money on the said time otherwise you will lose your item.
- Title loans:You can go for title loans in which you must put any of your vehicles to get money. But when you fail to repay your loan, the title lenders can possess your vehicle.
- Payday loans:You can also apply for payday loans under debt review. Some lenders don’t care- you are under a debt review because they believe in fixing your financial problems.
What happens when a person is under debt review?
When an individual is under a debt review process- this can be one of the challenging times. There is a reason behind this; no one is interested in offering financial services like loans because a declaration is already made that your debts are accumulated. Credit bureaus have the tag that you are under debt review, which makes you helpless to avail of any financial help.
Once you are free of the review process, the debt counselor gives the clean chit issuing a certificate. Removing the debt review flag from your credit report is beneficial, which makes you start your new financial journey from the beginning.
What happens if I fail to pay debt review?
In case you still need to repay the debt review. Then, your creditor will come ahead to take action against you legally. They have a right to terminate your agreements. If debt counseling is not ongoing, they can demand a part of your salary. Also, you may have to lose your assets because they possess them.
How do I rebuild my credit after debt review?
A certificate will be issued within 21 days; you are done with the debt review process. Your name will no longer appear on credit bureaus where you still are under debt review, so you can start rebuilding your credit score.
Settling debt is all about- you didn’t make your payments on time as agreed, which hurts your credit score. There are many factors to consider further regarding how badly your score hit. They are- for how long you didn’t pay your bills and the number of accounts that you settled.
Consider 5 steps for rebuilding credit:
- Monitor credit report: You must keep your eyes on your credit report. In case you don’t see any change, then approach credit bureaus.
- Apply for new credit: You can also consider applying for some new credits, making your job easy for credit rebuilding. You can try for a secured credit card with high-interest rates, which makes you deposit some money, rebuilding your credit.
- Be an authorized user: Someone your acquaintance has a good credit score who can help you rebuild your credit by adding you to their authorized user.
- Pay on time: Paying on time is one of the most critical factors for rebuilding your credit score. So, you must be punctual to make timely payments if you want to rebuild your credit.
