11 Mar What Happens When Debt Review Is Terminated?

What happens when debt review is terminated depends on the circumstances under which it’s terminated. Debt review can be terminated when you’ve paid all your debts, defaulted on a payment, or had the order rescinded. If you’ve paid all your debts and the process is terminated using a clearance certificate, you’re eligible to apply for credit again. In contrast, defaulting on debt review payments can lead to legal action. You can also terminate debt review by rescindal, which has the same effect as a clearance certificate.

In this post, we discuss what happens when debt review is terminated when you’ve paid off all your debts, defaulted on a payment, or had a debt review order rescinded.

You’ve Paid off Your Debts

When you’ve paid off all your debts under debt review, you’re eligible for a clearance certificate, which effectively terminates the debt review process. You’ll no longer have to make repayments to your PDA (payment distribution agency) and can submit your credit clearance certificate to the bureaus. Once you’ve submitted your clearance certificate to the bureaus, they must expunge the debt review flag and the debts that led up to it from your credit history.

After the debt review flag is expunged, you’ll be able to begin rebuilding your credit again. Note that your payment history will remain on your credit history – the fact that you made payments to a PDA.

The National Credit Act says, “A consumer whose debts have been re-arranged in terms of Part D of this Chapter, [may apply to a debt counsellor at any time for a clearance certificate relating to that debt re-arrangement] must be issued with a clearance certificate by a debt counsellor within seven days after the consumer has…satisfied all the obligations under every credit agreement that was subject to.”

This means that once you’ve repaid all the debts in terms of your repayment plan, you can ask for a clearance certificate.

You’ve Defaulted on a Payment

Under debt review, you’re protected from legal action unless you default on a payment. When you default on your debt review payment, your creditors are allowed to take action as they would have before debt review.

The National Credit Act reads, “A credit provider who receives notice of court proceedings [debt review]… may not exercise or enforce by litigation or other judicial process any right or security …under that credit agreement until…the consumer defaults on any obligation in terms of a re-arrangement agreed between the consumer and credit providers, or ordered by a court or the Tribunal.”

This means no one can take legal action against you unless you don’t make a debt review payment, in which case your creditors can sue you as they would have before debt review.

You’ve Had the Order Rescinded

Unfortunately, there’s nothing in the National Credit Act that regulates debt review rescindal, only the National Credit Regulator’s guidelines. The guidelines say that you can get out of debt review quickly if there was an error in the filing of your application. You must follow the court process for debt review removal.

Contact Cape Town Legal Consultants for help rescinding your debt review order or submitting a clearance certificate to the bureaus. We’ll help you clear your credit record, ensuring you can apply for credit responsibly and rebuild your financial health.