Simply put, when you are under debt review, you must avoid loans at all costs. When you’re in debt, taking out a personal loan can cost you everything you’ve fought so hard for. They have helped and protected many Ghanaians from being blacklisted. Besides that, it protects their belongings from being repossessed, or living with a severe debt burden. This has been the case since the National Credit Act (NCA) introduced debt review in 2007. You might want to know if you can get a loan under debt review. This article provides you with what you should know about debt review. Besides that, it will also provide you with insight into whether you can get a loan under debt review.
The meaning of debt review, the goal of the debt program, how it works and so on are all-inclusive in this article.
What is debt review?
Debt review is a formal debt rehabilitation program that aims to assist consumers who are suffering to make ends meet financially. If you’re facing a debt review, it implies you’ve hired a debt counsellor. And this counsellor has determined that you’re over-indebted and in need of a repayment plan.
What is the goal of debt management program?
The goal of a debt management program is to get people out of debt and teach them how to manage their money. While debt review has some advantages, such as protecting your assets from being repossessed by the creditor, it can also have serious consequences if it does not follow the process and agreement.
Because of this, they should not consider debt review as a quick or easy means to get out of debt. Applicants should use it only when absolutely necessary. Besides that, they should understand that it will require a significant amount of dedication, discipline, and sacrifice on their part.
How does debt review work?
A debt counselor examines your outstanding debt. Thereafter, works with you to build a restructured debt repayment plan during the debt review process.
The debt counselor then works with your credit providers to renegotiate interest rates and repayment arrangements. Definitely with the goal of lowering your debt levels.
You’ll just have to make one reduced monthly payment to your debt counselor after that.
After the debt counselor has created an affordable monthly budget and repayment plan for you. You can begin your journey to financial freedom with some breathing room and peace of mind. Especially knowing that creditors will no longer harass you.
When you are under debt review, however, you should:
- They do not permit new credit agreements, either loans or property finance.
- Additional fees, such as debt counselor fees, payment distribution fees, agency fees, and so on, would have to be paid.
- Because of the longer payback periods, you may wind yourself paying higher interest.
- Your credit report will show a flag to creditors showing that you are in the process of debt restructuring.
It’s also worth noting that once you’ve decided and confirmed your repayment plan. You can’t skip any payments while you’re under debt review. If you miss a payment while under debt review, they may cancel your entire payment plan.
So, to ensure that your debt review is effective, you must make every monthly payment under your repayment plan on time to avoid jeopardizing your debt review agreement.
What if you can’t afford to pay your debt review?
Before you begin the debt review process, understand that they have given you a lifeline to protect your assets. Besides that, they provide you with a consolidated repayment plan with lower interest rates. Because of this, you must make sure you don’t miss any payments at any costs.
If you miss a payment or don’t make it at all, your creditors may take legal action against you. Also, they may repossess your property, and you may lose all the payments you’ve already made toward the debt.
Before signing a debt review form or application, make sure you understand what they expect of you. This will help protect you from a financial bind that may also jeopardize your possessions.
How long does the debt review process last?
While debt repayment through the debt review procedure can take up to 60 months on average, it depends on a variety of circumstances, including:
- How much debt do you now have?
- What is the interest rate on your debt?
- What level of commitment do you have to get out of debt?
Can I get a loan while my debt is being reviewed?
You won’t be able to get a loan or a credit card while your debt is being reviewed. They didn’t create this to make things tough for you. Rather, it’s meant to assist you in regaining financial control. If you keep using credit during the procedure, your debt will spiral out of control. And because of this, you may not make your scheduled payments.
In the market, however, there are several unregistered loan sharks and reckless lending companies. If they give you a loan while your debt is being reviewed, you should be extremely cautious. These unscrupulous persons are most likely attempting to make money off of you by exploiting your vulnerabilities. Besides that, they may charge you exorbitant interest rates.
The NCA (National Credit Act established the debt review process) in order for South Africans who are in debt to rehabilitate their finances. The alternative would be to go into personal administration and deal with the long-term consequences, such as asset repossession.
The major goal of the debt review procedure is to get the person debt-free so that they may concentrate on their current debt rather than adding to it.
Why should I consider debt review?
- Instead of making many payments to different vendors, you’ll simply have to make one fixed monthly payment.
- Reduced monthly debt repayment installments can assist you in making room for your expenses.
- The NCA will legally safeguard you from creditors seizing your property.
- When you are under debt review, credit bureaus no longer have the authority to blacklist you.
- Take a break from credit and get out of the debt quagmire.
- You will become debt-free and embark on a path to financial independence.
What happens if I need more money whilst under debt review?
Life happens to all of us, and we can become overwhelmed by the pressing financial demands of our time.
If you still need to use credit to cover your daily costs, speak with your debt counselor about how they can help you budget more effectively each month. You must be able to handle your existing debt and learn to change your lifestyle until they pay off your debt. The sense of liberation you’ll feel at the end of the procedure will far transcend any sentiments of instant satisfying fulfillment.
Can your car be repossessed while under debt review?
No, your car will not be repossessed while under debt review. Your assets are still safe while you are undergoing Debt Review due to the National Credit Act’s (NCA) protection. This means that during Debt Review, your car cannot be repossessed.
Debt review summary
If you are over-indebted, undergoing a debt review can help you organize your debt and structure payment schedules into much more manageable and doable portions.
If you’re worried about losing your home or car because you’re in too much debt, a debt review may help you save your possessions from being repossessed.
Debt Review can help you get out of debt in the long-term while also protecting you from having to rely on personal loans to pay off additional bills.
However, before requesting a debt review, you should first contact your creditors to advise them of your difficulties paying your credit payments and see if they would be ready to renegotiate other payment conditions that would better suit your current situation.
Conclusion
The lesson here is clear: while a change in lifestyle brought on by financial fragility is difficult, and reassessing priorities to create a budget is emotionally demanding, making cuts sooner rather than later may mean making fewer harsh decisions. Keeping your financial alternatives open requires monthly monitoring of your own financial well-being and early discovery of a rising budget imbalance.
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