Going Under Debt Review Does Not Get You Blacklisted…

So many consumers who are under financial duress and struggling financially, to the point where they’re on the verge of losing their assets, won’t apply for formal debt counselling because they believe that they will be blacklisted as a result.

The only place where I can think that this grave misconception comes from is, when a consumer applies for formal debt counselling and are placed under debt review, for the duration of their term, they are not eligible for credit.

Meaning, they can’t apply for or use any of their credit facilities…

Consumers credit profiles are flagged, and this is then picked up by creditors.

The reason for this is not to punish the consumer for being in financial trouble regarding their debt, it’s to safeguard the consumer, as well as the creditor.

The consumer is protected by not being able to apply for credit or use their existing credit facilities because that would defeat the whole purpose of the process.

The objective of formal debt counselling is to get the consumer financially independent and debt free again, then, back into the economy, as a responsible credit active consumer again.

As this is what the basis of economies are built on, a country needing its consumers to make and repay debt.

So why, if they’re already struggling, would they be allowed to make even more debt…??

That defeats the purpose and consumers who have this attitude in mind should seriously assess their intentions of being financially rehabilitated.

From the creditors perspective, all registered financial service providers who fall under the National Credit Act and are regulated by the National Credit Regulator, have a fiduciary responsibility to not practice reckless lending.

Reckless lending is when a creditor grants a consumer credit that they cannot afford, or once granted that credit, as a result of the credit being granted, they are now over-indebted.

For an already over-indebted consumer who is under debt counselling, granting of credit would be disastrous, and puts them in an even worse off position financially.

Can you see how this practice would be nonsensical…??

So when a consumer applies for debt counselling, debt counsellors job is to help that consumer become debt free and financially independent in the quickest possible time.

Then once their debt counselling term has finished, the debt counsellor grants the consumer paid up letters of all their accounts, along with a clearance certificate.

Copies of these are also sent off to the NCR (National Credit Regulator) and once verified, the consumers credit profile is updated at the credit bureaus, and after 60 days, the consumer can go and apply for credit again.

So now you can see that you will not be blacklisted when applying for debt counselling, as I’ve explained to you that the whole objective is to actually get you debt free, in order to become creditworthy again…

I hope you found this post informative and educational…

If you have any further questions or queries regarding formal debt counselling, please do not hesitate to email me at andre@exonerate.co.za and I’ll be happy to answer any further queries or questions you may have.

Regards and best wishes to your financial independence…

André Misrole