I just wanted to know: If I exit debt review and pay the bank directly, will my credit record be cleared and will I be able to get property finance while I am still paying the vehicle in terms of the original payment agreement?
I am just thinking that since I have been under debt review the years went up as well as the balance, which even will take more time to pay-up and I need to buy a property and don’t want to wait until I finish the vehicle. Please advise.
Lauren Wepener, consumer care expert atCompuscan, responds:
You seem to have done a good job building your credit reputation – congratulations on taking charge of your debt.
The good news is that you are able to reach your goals as your rights as a consumer enable you to do so.
The National Credit Regulator (NCR) issued new guidelines on February 20 2015 that address the matter of debt review amongst other things.
These guidelines allow you to make payments directly to the credit provider, instead of making use of a payment distribution agent. This right is also enshrined in the National Credit Amendment Act (NCAA) and it will allow you to fast-track the payments as you wish to.
The decision to make direct payments to credit providers cannot be construed as non-cooperation and may not be used as a reason for suspension of debt counselling services – this means that you have the right to follow this method should you wish to.
Should you decide to exercise these rights, the following will apply:
– You will remain responsible to make all payments as per the re-arrangement in full and on time;
– Proof of payments must be sent to the debt counsellor on a monthly basis for record keeping;
– Your debt counsellor must explain the consequences of short or late payments – for instance the risk of termination by credit providers;
– Debt counselling fees are payable to your debt counsellor for services rendered and this includes payment of aftercare fees;
– For a debt counsellor to issue a clearance certificate, all after care fees must be up to date.
The other option is to request your debt counsellor to supply you with a clearance certificate on the basis that you have demonstrated a financial ability to satisfy the future obligations.
This will mean that you are able to comply in terms of the re-arrangement order or agreement under your long term loans (vehicle finance).
The NCAA no longer requires you to remain in the programme until all debts have been settled, taking cognisance of the fact that your financial situation may improve long before any included mortgage or long term agreements have been settled in full.
As the debt review process effectively locks you out of the credit market, the amendment was made to allow you to re-enter the market, when adequately rehabilitated. Please note that this option is only possible once any short term loans that have been included in the re-arrangement have been paid in full.
We recommend that you do not attempt to exit the programme before obtaining a clearance certificate. The reason for this is that when you settle your debts under a clearance certificate, the credit bureau is able to remove all negative payment profile history in respect of the affected accounts.
Where you settle the accounts in full, but a clearance certificate is not issued, the negative payment profile information can remain on the report for a period of up to five years.
Regardless of your debt review status, the NCR’s guidelines make it rather difficult for a consumer to simply exit the programme. You would be required to apply to court to prove that you are no longer over-indebted.
In our experience, it is easier and far more beneficial to seek the assistance of the debt counsellor within the legal parameters and obtain a clearance certificate.
Having said that, we are mindful of the fact that it is very unlikely that you will be able to obtain a home loan while under debt review.
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