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Loans For Debt Review Clients: Tips And Insights

by | Sep 18, 2023 | Personal Finance

You could be under debt review, well on your way to finding your financial freedom; however, life still happens, and at some point, you might find yourself looking for loans for debt review clients. Whether you’re facing an unexpected emergency or require funds for essential household expenses, loans often become a practical solution to bridge the financial gap.

In this blog, we’ll explore loans under debt review, discuss the safety and advisability of loans for debt review clients, and provide guidance to help you navigate your debt review journey so that you can ultimately achieve your goal of becoming debt-free.

What Is Debt Review?

Before diving deeper into loans for debt review clients, we must first define what debt review is. Debt review is a debt relief program overseen by the National Credit Regulator (NCR) and was established in 2007 through the National Credit Act (NCA). Its primary purpose is to provide guidance to individuals who are struggling with their debts. This program offers a structured approach to your financial woes by assisting you with budgeting, negotiating with creditors to reduce your payments, and reorganising your debts. It’s designed to offer a way to make your debt manageable while also being fair to your creditors.

Assessing Over-Indebtedness

A consumer is considered over-indebted when their monthly income falls short of covering all their debts while meeting those essential expenses. It can happen for various reasons, like a sudden loss of income or perhaps some not-so-great lending practices. Debt review steps in as a structured approach to tackle these challenges. But it’s crucial to remember that it’s not a magical “get-out-of-debt-free” card. It comes with responsibilities and costs.

Protection From Legal Action

One of the benefits of debt review is that it can shield you from creditors who are thinking about legal action, trying to take your assets, or using aggressive debt collection tactics. However, if a creditor has already taken legal action against you or you’ve received a Section 129 notice from your creditors, serving as a final warning before they resort to legal action, it might be trickier to include those debts in the review process.

Duration of Debt Review

The length of your debt review period is determined by the amount of debt you have. However, most debt counsellors strive to finish the process within a five-year timeframe. Once your unsecured debts are paid in full and your debt counsellor issues a clearance certificate, you are released from debt review. This certificate is sent to credit bureaus to update your credit record, removing negative information about your previous debt struggles.

Loans for Debt Review Clients - Are They a Possibility

Loans for Debt Review Clients: Are They a Possibility?

Navigating one’s finances in the current economic climate can be extremely difficult, and many consumers often find themselves in a situation where they are under debt review and need a loan urgently. However, under the rules of the National Credit Act and the National Credit Regulator, loans for people under debt review aren’t a possibility until you’ve paid off all your debt according to your plan and received a clearance certificate. Once you finish your debt review program, your credit report with all credit bureaus will be updated to show that you’re debt-free, and you can restart your credit journey again.

The main goal of debt review is to deal with your current debts responsibly, and taking on more debt during this time is strongly discouraged. The smart move is to focus on paying off your existing debt before pursuing debt review loans. Debt review often means lower interest rates and longer payment terms, making your monthly payments much more manageable. It’s the perfect time to start saving for a deposit on your dream home or any other goals you have for your debt-free future.

Even though debt review can be challenging at times, it’s helping you become a more responsible borrower. Essentially, the fact that loans for debt review clients are not legally allowed is actually a good thing because consumers under debt review get to start their journey toward debt recovery almost immediately by adopting healthier financial habits, as they are unable to apply for new loans while under debt review as the focus is on debt management and restructuring without taking on additional debt.

Loans For Debt Review Clients - Factors To Consider

Loans For Debt Review Clients: Factors To Consider

When facing financial difficulties, many consumers may consider informal loans for debt review clients out of desperation because they can’t secure loans from established lenders. However, this isn’t typically a wise choice. Informal loans, with catchy marketing promising loans for debt review clients with no upfront fees, might seem attractive if you’re seeking a small loan without substantial administrative fees or if you don’t meet the requirements for a formal loan from a registered credit provider as in the case of being under debt review.

Nonetheless, it’s important to understand that loans for debt review clients have their downsides, which could ultimately lead to significant financial burdens. Before considering an emergency loan for debt review clients, here are a few factors to consider.

1.      The Interest Rates Are Higher

Informal money lenders offering loans for debt review clients often charge interest rates that exceed the maximum rates set by the National Credit Act, both annually and monthly. This means you could pay much more than you initially borrowed.

2.      Loans For Debt Review Clients Aren’t Legal

These lenders often operate outside legal boundaries and the formal regulations designed to protect you as a consumer. This can put you at risk.

3.      Collection Methods May Also Be Outside Of The Law

If you happen to miss a payment, unregistered credit providers may resort to illegal collection methods, like withholding your ID, bank cards, PINs, or even SASSA cards. If you ever feel threatened or harassed by a lender, don’t hesitate to report the situation to the police.

4.      Loans for Debt Review Clients Will Trap You Into Something You Cannot Afford

Informal lenders, including those offering loans for debt review clients online, often practice reckless lending whereby they do not thoroughly assess your ability to repay the loan without negatively impacting your other financial commitments. This, coupled with their high interest rates, can lead to a situation where a significant portion of your salary goes towards repaying the loan, possibly exceeding the initial borrowed amount.  If you believe you’re being treated unfairly by your lender, you have options. You can file a complaint with the National Credit Regulator (NCR) at www.ncr.org.za.

Loans for Debt Review Clients - What if I Can’t Keep Up with Payments

Loans for Debt Review Clients: What if I Can’t Keep Up with Payments?

When individuals encounter financial hardship once more, they may ponder the possibility of skipping their debt review payments. However, that is not a great idea. Under debt review, your assets are protected, and your creditors cannot take legal action against you because the program is provided for in the National Credit Act. If you miss your debt review payments and your debt counsellor stops assisting you, your creditors might initiate legal actions or take control of your assets. What’s more, if your creditors obtain judgments to recover the debt, they will stick to the original terms. So, it’s really important to stay on track with your debt review payments to avoid these kinds of issues.

Should you find yourself grappling with financial challenges and unable to meet your monthly debt obligations, it is crucial to promptly contact your debt counsellor. Without further entrapping you with loans for debt review clients, your debt counsellor can collaborate with you and your creditors to reassess your monthly installments, accommodate your new budget, or explore alternatives, especially in cases of extreme circumstances such as job loss.

At National Debt Advisors, we also offer credit life insurance to all our clients undergoing debt review. This insurance acts as a safety net, stepping in to cover your debt payments if you ever face a period of unemployment. If you’ve kept up with your debt review payments and the required waiting period has passed, you can ask our insurer to activate your coverage right away. This coverage can assist you in managing your debts for up to 12 months while you’re without a job.

It’s worth noting that if six months go by and you’re still unemployed, you’ll need to provide an affidavit to your credit life insurer confirming your ongoing unemployment. This step is necessary to continue receiving payments for the remaining six months of coverage.

Navigating The Tough Times Without Loans For Debt Review Clients

Navigating The Tough Times Without Loans For Debt Review Clients

Managing financial challenges can feel overwhelming, especially when you’re already undergoing debt review. At National Debt Advisors, we understand the complexities of navigating tough times and are committed to supporting our clients every step of the way.

In addition to our debt review services, we offer credit life insurance as an added layer of security during periods of unemployment. If you’ve been diligent with your debt review payments and have completed the required waiting period, you can activate this coverage. It can provide assistance in managing your debts for a maximum of 12 months if you find yourself without a job.

Our mission at National Debt Advisors is to guide you through these challenging financial times and help you achieve your ultimate goal of becoming debt-free. Whether you require debt assistance or have questions about managing your finances while under debt review, please don’t hesitate to reach out to us. Your financial well-being is our top priority, and we’re dedicated to assisting you every step of the way so you won’t have to resort to seeking loans for debt review clients.

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