Debt review, also known as debt counselling, is a process that helps over-indebted individuals manage their debt. However, once an individual enters debt review, it can have long-lasting consequences. One of the most frequently asked questions by people who have been in debt review or are considering it is how long the record of debt review stays on their name. This article will answer that question.
What is debt review?
Before diving into the duration of debt review, it's essential to understand what it is. Debt review is a debt relief measure introduced by the National Credit Act in South Africa. It is a legal process that aims to assist individuals who are over-indebted to rearrange their debt and repay it over an extended period.
How Long Does Debt Review Stay On Your Name?
Debt review remains on an individual's credit report for three years after the debt has been settled or paid up. This is according to the National Credit Regulator (NCR), which oversees the debt review process in South Africa. The three-year period begins from the date of clearance certificate. If you don't have a clearance certificate, the debt review status will remain on your name indefinitely.
Why Does Debt Review Stay on Your Name for So Long?
The reason debt review stays on your name for an extended period is that it is a legal process that affects your credit profile and your ability to access credit in the future. Credit providers use the credit bureau information to assess the creditworthiness of individuals who apply for credit. Therefore, debt review information is essential for making informed decisions about lending.
How Does Debt Review Affect Your Credit Score?
Debt review does have significant consequences on an individual's credit score. When you enter debt review, it will be noted on your credit report, and it will negatively impact your credit score. It also means that you won't be able to take out any further credit until the debt review process is completed. However, once you have successfully completed the debt review process, your credit score should improve.
Final Thoughts
If you are struggling with debt, debt review can be a helpful process to get your finances in order. However, it's important to remember that debt review stays on your credit report for three years after the debt has been paid up. During this period, it may be difficult to access credit. If you're unsure whether debt review is the right option for you, it's always recommended to speak to a financial advisor.
