Covid-19 Outbreak SA Online Resource | More info
Insurance, Car Insurance, Funeral Cover, Life Insurance, Budget Insurance, Insurance Quotes, CompareGuru, South Africa.
Car and Household
Business
Life and Funeral
Car Insurance
Cover your vehicle
More Information
Get Quote
Pre-Owned Warranty
Cover the mechanical and electrical components of your vehicle
More Information
Get Quote
Extended Warranty
Cover the mechanical and electrical components of your vehicle
More Information
Get Quote
Scratch and Dent
Cover small dents, chips and scratches to your vehicle
More Information
Get Quote
Tyre and Rim
Cover damages to your wheels
More Information
Get Quote
Home Insurance
Cover your home and everything in it
More Information
Get Quote
Commercial Vehicle Insurance
Protect vehicles and drivers used in the day-to-day operation of your business against risks like financial loss, damage or personal injury.
More Information
Get Quote
Commercial Insurance
Provide cover against common risks and disruptions to business operations, such as theft, damage to property, employee / client injury and much more.
More Information
Get Quote
Directors and Officers Liability
Safeguard your business and key players from financial loss with the right policy.
More Information
Get Quote
Errors and Omissions Liability
Covers your business and employees against claims of negligence, poor workmanship, and more.
More Information
Get Quote
Life Insurance
Provide for your loved ones
More Information
Get Quote
Disability Insurance
Protect your paycheck
More Information
Get Quote
Serious Illness Insurance
Cover yourself for illnesses like cancer, Alzheimers, Parkinsons, strokes or heart attacks.
More Information
Get Quote
Funeral Cover
Protect your family financially and cover funeral expenses
More Information
Get Quote
Domestic Worker Insurance
Cover the person that looks after you and your family everyday
More Information
Get Quote
Menu
Home
About Us
Domestic Worker Cover Quote
Life Insurance Quote
Car Insurance Quote
Funeral Insurance Quote
Extended Warranty Quote
Pre-Owned Warranty Quote
Scratch and Dent Quote
Tyre And Rim Quote
News Room
Meet The Team
Careers
Providers
Insurance
Car Insurance
Building Insurance
Household Contents Insurance
Life Insurance
Disability Insurance
Serious Illness Insurance
Domestic Worker Insurance
All Risk Insurance
Funeral Insurance
MotorVAPS Cover
Commercial Insurance
Commercial Vehicle Insurance
Directors and Officers Liability Insurance
Errors and Omissions Liability Insurance
Support
Contact Us
Terms of Service
Privacy Policy
Disclosures
Client Letter
POPI Act
PIA Act
CIM Policy
Complaint Escalation
TCF Form

News Room

Is a Loan Possible Under Debt Review?

Melissa Cohen
2016-09-13
Is a consolidation loan possible or recommended under debt review and is it possible to exit debt review voluntarily?
The collections people were calling you. All. The. Time. They spoke a big game saying things like, “we will have to hand you over,” and, “you're blacklisted”. You may even have been on a first name basis with the guy who wanted to repossess your car, Kobus. And now you’re under debt review as a last resort to consolidate your debt. So, your lack of a budget has finally caught up to you. You've also realised putting everything on credit to keep the cashflow strong is not the wisest decision. Thankfully, you've applied for debt review to help you get out of hot water and back into good standing with the credit providers. But now that the phone’s stopped ringing, your anxiety’s subsided, and you’ve made some lifestyle adjustments to live more frugally, you’re considering getting a loan to consolidate your debt instead.

Can You Take Out a Loan Under Debt Review?

If you’re undergoing debt counselling, you’ve been officially declared over-indebted. That is, your income, minus the cost of living, is less than your expenses. While under debt review, you’re not allowed to take out any more loans (as per the National Credit Act – NCA). Reason being, this would be considered reckless lending. But some private lenders still do. Furthermore, as it’s a high risk loan, it comes at the cost of an even higher interest rate. Plus the risk of digging yourself deeper into the hole you’re trying to get out of. This is not recommended. The point of undergoing debt review, is to become debt-free and be rehabilitated back into the credit market. This is difficult, if not impossible, if you keep adding to your debt. The debt review process includes negotiating a “single provisionally reduced monthly instalment” that is more affordable. It entails an extended payment period so, in effect, you will be in debt for a longer period of time. During the debt review period, you’ll be unable to apply for any more credit with any traditional (and reputable) financial institutions.

Can I Get Out of Debt Review?

If your financial circumstances change, or you have only a home loan or other large credit agreement remaining (that is not in arrears) under the debt rearrangement order, you can apply to rescind a debt review court order. You'll have to demonstrate to the court your financial affordability to repay the original outstanding amounts once an application to rescind the debt review order has been made. If you’re found capable of making payments directly to the outstanding creditors, outside of the debt rearrangement order, the debt review court order will be rescinded. At this point, if you’ve paid all the short-term loans included in the rearrangement in full, you will be issued with a clearance certificate from your debt counsellor. This allows you to re-enter the credit market. The credit bureau will also be able to remove the negative payment profile history on the affected accounts. You’ll now be able to apply for a consolidation loan. If you only have secure debts like a home loan or car finance to pay off, however, this won’t be necessary. The secure interest rates are unlikely to be higher than that of a consolidation loan. In other words, you're already better off.
CompareGuru Social TwitterCompareGuru Social FacebookCompareGuru Social LinkedIn

Sign up to our Newsletter now, and don’t miss a beat.

Email Address
Name
Sign Up