People all around the world face financial difficulties, and South Africans are no exception. Many South Africans use credit cards and loans to buy daily necessities and pay for living expenses. In fact, several South African consumers use their credit cards and loans to live above their means – attempting to maintain a lifestyle they can’t afford.
Anyone with an adequate credit score can access credit and borrow money for things that they can’t afford at the moment. Naturally, every creditor expects the borrowed money to be repaid on time and with interest.
Soon after accumulating debt from multiple creditors, lenders find themselves in trouble – with too much debt and not enough money to repay the loans.
This is referred to as being over-indebted, and it’s important to note that uncontrolled lending was the cause.
The ability to access credit leads to debt, which reduces one’s ability to repay the debt, thus creating the need for more credit, which adds to the total debt and the inability to afford it. This is known as the debt cycle. Keep this in mind as we discuss getting a loan while under debt review.
Now, let’s get to your question, “can I get a loan while under debt review?”
The short answer is no, and for good reason, but let’s first look at why you cannot get a loan while under debt review.
When your debt review application is processed, credit providers and the credit bureau are notified. And our debt review status is updated.
Remember the never-ending debt cycle we discussed earlier? Now, your new debt review status protects you and your belongings and restricts your access to additional credit. Removing the temptation to make more debt helps you to focus on repaying what you owe and ultimately become debt-free.
Prohibiting you from getting a new loan or credit card while under debt review is not to make your life difficult or prevent you from buying the things you want. The purpose of debt counselling is to help you gain control of your finances and get you out of debt.
When you finish the debt review process, your debt counsellor issues a clearance form that notifies the credit bureau and the National Credit Regulator that you’ve paid off all of your debt and that the credit bureau should update your debt review status.
You’ll be able to apply for loans and access credit as soon as your debt review status is removed, but take care before doing so. To become truly wealthy, you should move away from debt and, instead, start saving money to invest.
To help break the debt cycle, many South Africans choose to undergo debt counselling (or debt review). Debt review allows over-indebted consumers to consolidate their debt into one, more affordable repayment. To ensure that the repayment is affordable, the debt counsellor looks at all your loans and expenses, plus your income, to develop an affordable payment plan. In addition, debt counselling also shields you from creditor harassment and protects your assets from repossession.
It may be necessary for you to apply for debt review to help make your repayment more affordable. Now, when the temptation to get a loan comes around again, you’ll know why it’s best to reconsider. Debt review has helped hundreds of thousands of South Africans, and it can help you too. Take advantage of this process and leave your debt behind Debt Restruct can help.
Find out if you’re eligible to reduce your debt and protect your belongings.
Disclaimer: This website and any information herein is not intended to be, nor does it constitute, financial, tax, legal, investment, credit, or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified professional directly.