The debt review restrictions and rules, under the National Credit Act (NCA) were put in place to protect consumers from reckless credit providers, over-indebtedness and their own misuse and abuse of credit. Nevertheless, depending on your personal situation, debt review restrictions can really trip you up in some cases.
Before committing yourself to any legal process, it is essential that you not only consider the merits of undertaking such a route, but also the restrictions you may be placing on yourself, in so doing.
The same applies to debt review. Depending on a variety of factors, this method may turn out to be strongly in your favour. On the other hand, it may also prevent you from improving your circumstances. Let’s have a look at a few scenarios where debt review restrictions may prove problematic.
The Business Opportunity Scenario
A lucrative business opportunity presents itself to you, for which you need financing, credit or a loan in order to take advantage of it. However, as you are under debt review, you’re legally prohibited from taking out new credit, until your unsecured debts are settled.
This is somewhat of a ‘Catch 22’, as this opportunity may have enabled you to uplift your financial situation, allowing you to, not only, pay off your debts sooner, but also to build up wealth and savings. On the other hand, if the business opportunity were to fall through, you would end up even deeper in debt than before.
The Property Investment Scenario
You are under debt review and have been for a a few years, but you still have a while to go before your vehicle finance is paid off in full. However, you come across a prime piece of real estate that would be an once-in-a-lifetime investment, as an ideal home for your expanding family.
Accordingly, you need to apply for property finance. However, while under debt review, you’re locked out of the credit market, which means your application for a home loan would be rejected.
Is Cancelling Debt Review an Option?
Cancelling debt review would only mean the negative information listed under your name at the credit bureaus would remain on your credit report for further 5 years For prospective credit providers, employers and landlords to access, upon running credit checks.
Moreover, terminating debt review requires a costly, drawn-out legal process of applying to court to prove that you are now financially rehabilitated. As follows, deciding to exit debt review wouldn’t aid you in taking out a loan, nor would it help you achieve your end goal of receiving a clearance certificate.
As a result, you would be forced to pass up on the opportunity to become a successful businessman and a proud homeowner, until you have finished paying off your debts. And by this time, the business world, property market and your circumstances may have evolved into a whole new ball game.
Conversely, with a little patience, debt review will help you to attain a debt free life, laying the foundation for you to start building up your wealth and enabling you to reach your business goals and buy that dream home.