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Can I get a personal loan while under debt review?

Simply put, you need to avoid loans at all costs when you are under debt review. Taking a personal loan when you are under debt review can cost you everything you’ve worked very hard for.

When the National Credit Act (NCA) introduced debt review in 2007; many South Africans have since been assisted and prevented from being blacklisted, having their assets repossessed, or living with a heavy burden of debt.

The purpose of a debt management program is to eliminate credit card debt and teach consumers how to manage their money, however, while debt review may have its benefits, such as protecting your assets from being repossessed by the credit provider, it can also have major negative consequences if the process and agreement are not adhered to.

As such, debt review should not be treated as a quick or easy way to get out of debt. Applicants should resort to it only when truly necessary, and with the understanding that it will take a lot of commitment, discipline, and sacrifice from them. Included in this discipline is not taking out more credit or another loan. 

How does debt review work?

During the debt review process, a debt counsellor assesses your outstanding debt and works along with you to create a restructured debt repayment plan

The debt counsellor then makes the effort to renegotiate interest rates and repayment terms with your credit providers with the intent of reducing your debt levels. 

You will then only have to pay ONE reduced repayment every month.

Did you know: clients at Meerkat can save up to 50% on their monthly debt instalment. 

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Once the debt counsellor has drawn up an affordable monthly budget and repayment plan for you, you can then start your journey to financial freedom with some breathing room and better peace of mind without any more creditors harassing you.

What happens if you can’t pay your debt review?

Before you get started with the debt review process, you need to understand that you have been granted a lifeline to protect your assets and afford you a consolidated repayment plan with lower interest rates; so you’d have to avoid missing any payments at all costs.

Falling short on your payments or not paying them at all can lead to your creditors taking legal action against you and repossessing your assets.

Make sure you understand what is expected of you before you sign on a debt review form or application, lest you put yourself at a financial disadvantage and risk your assets.

How long does the debt review process last?

While debt repayment under the debt review process can take up to 60 months on average; it is all depended on a number of factors, including:

  • How much debt you have currently;
  • How high your debt interest rates are; and
  • How committed you are to becoming debt-free.

Can I take out a loan while under debt review?

While under debt review, you cannot access further credit in the form of a loan or credit card. This is not to make life difficult but rather to help you regain financial control. If you continued to access credit during the process your debt would spiral out of control and you would be unable to make the committed repayments.

There are, however, a number of unregistered loan sharks and reckless lending companies in the market. If you are offered a loan while under debt review you should be very wary. It is likely these unscrupulous characters are looking to make money out of you by taking advantage of your vulnerability and will have incredibly high-interest rates.

The main aim of the debt review process is to get the person debt-free and focus on their current debt instead of building up more. One of the key benefits of going under debt review with Meerkat is that we will start an emergency fund as part of your plan.

This will provide a buffer for you when life happens and you will not need to rely on debt as you will now have savings.

Why should I consider debt review?

  1. You’ll only pay one fixed monthly payment instead of multiple payments.
  2. Reduced monthly payments towards debt repayment can help you create room to afford your daily expenses.
  3. You will be legally protected by the NCA from creditors repossessing your assets like your home and your car. 
  4. Credit bureaus no longer have the power to blacklist you when you are under debt review.
  5. You will become debt-free and journey into a life of financial freedom.

What happens if I need more money whilst under debt review?

The truth is that life happens to all of us, and sometimes we get overwhelmed by the immediate financial needs demanding our attention.

However, if you are still needing to fund your everyday expenses through credit, get in touch with your debt counsellor and discuss how they can assist you to better budget each month.

You need to be able to manage the debt you currently have and learn to adjust your lifestyle until the debt is paid off. The sense of freedom at the end of the process will far outweigh any feelings of satisfaction from instant gratification.

⇢ Read more about the benefits and disadvantages of debt review.

Debt review summary

Undergoing Debt review can change your life if you are over-indebted; it can help you organise your debt and structure payment plans into much more manageable and achievable bites.

If you’re fearing that you will lose your home and car because you’re in too deep with debt, getting into the debt review process can help you protect your assets from being repossessed.

In the long run, Debt Review can provide debt relief for over-indebtedness and also protect you from having to depend on persistent personal loans to pay other debts. 

Contact me about debt review >>

 

 

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