Thereafter, once the court order is obtained, the debt review signifier must be removed from the consumer's credit reports and from the NCR's database. This takes a minimum of 20 business days as per the National Credit Act 34 of 2005.
To check your debt review status, you have to request your credit report from a credit bureau like TransUnion or Experian. You can do this for free once every year; otherwise, the credit report could cost a few Rand – we recommend checking with your chosen service provider before requesting your report.
If DMC owns the debt, we will submit a request to the relevant credit bureau to update your credit profile. Please note that updates can take up to 30 days to reflect on the credit bureau. How can I check my credit record?
Pay more than the minimum amount due
The best way to get out of debt faster is to pay more than is expected every month. It's important to understand that your monthly instalment is made up of a principal and an interest component.
The Maximum is Five Years
When your debt counsellor negotiates new terms for your debt with your credit providers, the plan must focus on paying off your debt in 60 months (five years) or less. This is generally the longest repayment period that your credit providers would agree to.
For example, paying all bills on time, finding the best credit cards for those with poor credit scores, or pursuing a credit builder loan. In most instances, reasonable expectations for a post-debt settlement recovery range from approximately 12 to 24 months.
The bottom line. The journey from debt settlement to homeownership is typically a matter of years rather than months. While the exact timeline can vary based on numerous factors, most individuals should expect to wait at least 2-3 years, with 4-7 years being more common for conventional loans.
During this period, you could pay your creditors directly or use an intermediary called a payment distribution agent. The agent keeps track of how much you pay each creditor in line with your payment plan and sends you and your debt counsellor monthly statements.
You will need to wait until your debt review period is over if you do decide to obtain a loan though. Reviewing your debts is a step toward financial freedom. You won't get any more unsolicited loan and credit card offers while under debt review.
However, once you pay off the debt, it will show as paid when your credit report is updated—typically within 30 days of you making the payment. Paid collection accounts typically have less negative impact on your credit score than unpaid ones.
What happens if I use my credit card while under debt review? You can't use your credit card once you're under debt counselling. Any attempt to do so would violate the terms of your debt counselling agreement.
Your debt payment period will be extended to lower your monthly instalments drastically. This means it will take longer to pay off your debts, and you'll continue to accrue interest on the outstanding balance, leading to higher overall interest payments.
Your credit score will be affected while you're under debt review. At this time, the debt consolidator will flag your credit profile to indicate that you are undergoing debt review. This flagging, however, will no longer be visible once you have completed the process and obtained your clearance certificate.
YES, at any point during the debt-review process. In terms of Section 86(10) the process doesn't start again when the consumer is successfully transferred to the new debt counsellor. The Client continues with the Debt Review as if nothing happened.
Keep in mind that, just like collectors, creditors are not compelled to accept your payment offer. The idea that they have to accept your payment or discharge the debt is a myth (see first paragraph). When creditors refuse payments, it's usually because company policy prohibits it.
Your creditors will issue you with a Section 129 letter which confirms you are in arrears. This will be followed by a summons and if ignored leads to a default judgement. It is at this point that a warrant of execution is issued, and your car can be repossessed and sold at auction to cover some of your debt.
So, while you can use your credit card accounts after consolidating your debt in most cases, it could be a bit more difficult to open and use new credit cards — and the route you take to consolidate your debt could play a role as well. Learn how the right debt relief strategy could help you now.
Will my CIBIL score improve after the loan settlement process? Ans. CIBIL score does improve gradually, as it is not an overnight process. It may require from 4 to 12 months to show some positive changes, after your loan settlement, as well as diligent use of credit and good payment history.
If you want to buy a home while on a debt management plan, you should talk with your credit counselor. Since some debt management plans raise red flags for lenders, the homebuyer might not qualify for a prime interest rate. Higher interest can add substantially to the monthly payment.
Your credit score will take some time to become good – as time passes your credit score will improve, and by a few months, it will be in a much better standing (but you don't have to wait that long to apply for credit). We would suggest waiting three months before applying for new credit.
Depending on the rest of your financial status, when you have a settled debt for less than the full amount owed, you may owe taxes on the money that was forgiven. The IRS considers any debt cancelation of $600 or more as additional income — and taxable — even if you didn't actually receive any money.