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“I Need A Loan So I Have To Leave Debt Review” And Other Silly Mistakes People Make

Leaving the debt review process because of wanting to get more credit or because someone tells you they can get you more credit is a mistake and will not work. You will not qualify for the new credit and you will lose all the benefits you received under debt review. You may even lose all the progress you had already made in paying up your debts.

 

After living for years on other people’s money (credit) it can be very hard for people who enter debt review to adjust to only spending what they have. It can be harder for them to learn to save towards future purchases. Often times they find the urge to live beyond their means so strong that they try to get more credit while under debt review (which is designed to get rid of all their debt). The temptation to go back to living on credit can be so strong that people make mistakes that could cost them their entire financial future.

‘it can be very hard for people who enter debt review to adjust to only spending what they have’

 

Stupid Promises From Sales People

Sometimes people who are already under debt review are contacted by salespeople offering them credit. These people earn a commission for making sales and may know very little about the legal process of debt review through the courts. As a result, they may tell you that you 100% can access new credit but would simply have to leave debt review to do so. They do not realise how this will sink you into a hole of debt so deep you may never escape. All they are worried about is making a commission and they don’t even realise how wrong they are.

Stupid Offers From Credit Provider Collections Agents

Sometimes a consumer will get a call from a collection agent for a credit provider who wants to talk about how they are repaying their existing debt (through their debt review). Now, this might be someone who works directly for the credit provider but is more likely to be an agent of an external collections attorney. These people some times offer consumers under debt review a ‘better repayment deal’ of a small repayment amount on their one account.

These collections agents do not consider if paying less is actually better for the consumer in the long run and they certainly do not care about all the other credit providers involved in the legal debt review process as shown in the consumer’s court order. They may then tell the consumer to leave debt review to qualify for this special cheaper monthly deal on this one debt.

The problem is that their offer could mean that it will take much longer for the consumer to pay off the debt since they are paying less each month. This means there would be more months during which the consumer can run into repayment problems while trying to settle their debt. This may not be better for the consumer as it leaves them exposed to their debt for longer (even if they are paying a little less each month). Also, they may not fully disclose how the interest portion of the debt will be developing over time. The consumer could end up paying much more in interest over time due to a bad rate or additional collection fees.

It is seldom that such a collections agent will make this offer in writing meaning that should the consumer actually make this mistake and leave debt review, when they then go to the credit provider there may be little or no record of such a deal. This could then leave the consumer stranded without the protection of the debt review and unable to get this reduced repayment deal.

If the deal was a good idea and was offered by the credit provider it would be much wiser to ask the Debt Counsellor to secure this deal inside the debt review and still stay protected.

‘Leaving debt review for the benefits offered by a single credit provider is foolish’

Leaving debt review for the benefits offered by a single credit provider is foolish as the other credit providers involved in the court order may then decide to start new legal action to collect their debt and this can mean the debt will balloon overnight as the benefits of the debt review are lost.

You Won’t Qualify For New Credit Anyway

Since debt review has to be completed to be removed from the credit bureau record it also means that simply saying to a Debt Counsellor that you are’ leaving debt review’ will not change your credit bureau report status. The report will still show you as under debt review until all your existing debts are paid up fully and a Debt Counsellor has issued the credit bureau with a clearance certificate.

‘The [credit bureau] report will still show you as under debt review until all your existing debts are paid up fully’

People who leave or stop paying halfway through are not able to access new credit until that listing is removed (when the debts are all settled).

So, simply stopping paying via debt review will mean that when the credit provider goes to check if they can give you the credit they promised you (remember that stupid salesperson?) their system will say: No, this person does not qualify for new credit they are under debt review. At this point, you will say that you were made an offer and told it would work. They will simply say “sorry” and that to give you credit would be reckless – which could result in them getting a million Rand fine. Then you will run back to your Debt Counsellor begging to be let back into debt review but it may already be too late.

What Happens Next

Next, the credit providers who were part of your debt review will begin to set their collections hounds on you again. The SMS, letters, calls and collections agents threatening legal action will all start again. Worse than that, you will probably lose all the benefits and progress you had achieved under debt review. This means the amounts you owe will suddenly shoot up to their old figures (or at least much higher than you had managed to get them under the debt review).

When you run to another Debt Counsellor asking them to help, it is likely they will not want to help since you so easily dropped out of the process once before and the credit provider departments will not want to help you again.

Please Don’t Make This Mistake

These offers and the temptation to fall back into using credit to live beyond your means may be very tempting indeed. You may feel that you need, or at the very least deserve, a new car or a bond to buy your own house now rather than waiting till all your other debts are paid up and you are financially free. You do deserve nice things but these deals and offers will not work for you.

‘The only way with debt review is to start and finish the process properly and to stick to the process’

The only way with debt review is to start and finish the process properly and to stick to the process throughout. Then, and only then once you are debt free, will you be better able to take on more credit responsibly, if you so desire. For now, please be patient, live modestly and save for future expenses. Track your progress through debt review so you have your end date in mind. If money gets tight then talk to your Debt Counsellor about ways you can save and spend less at home.

Avoid falling into these common traps that have tripped up so many good people along the way and ruined their future financial security all because of false promises.

 

 

 

 

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