The need for extra cash can make you feel devastated, especially when loan apps or companies turn your request down due to being under debt review.
As an individual, if you are under debt review and urgently need a loan, you are likely to be facing a tough financial situation.
In this content, I will guide you through what it means to be under debt review, your loan options, and also how to handle an urgent financial need without worsening your financial status.
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What Is Debt Review?
Debt review, also known as debt counselling, is a legal process designed to help people who are over-indebted.
It was introduced in South Africa through the National Credit Act (NCA) to assist individuals in restructuring their debts and protecting them from losing assets like their homes or cars.
When an individual is under debt review, a registered debt counsellor negotiates with the individual’s creditors on the individual’s behalf.
The goal is to develop a more affordable monthly repayment plan. During this period, the following will be observed;
- You cannot take out new credit or loans.
- Your credit record is marked as under debt review.
- Your finances are closely monitored to ensure the agreed payment plan is followed.
While this process can be a lifeline, it also limits your ability to access credit even in emergencies.
Why People Under-Debt Review Still Need Loans
People who are indebted still need loans to take care of Medical emergencies, Home repairs, School tuition or exam fees, Transportation problems, and Funeral expenses.
During debt review, new credit is restricted, and people in this situation often feel stuck. However, there are some alternative solutions that may help, which we will explore below.
Can You Get A Loan While Under Debt Review?
No, you can not get a loan while under debt review legally through registered lenders. According to the National Credit Act, credit providers are prohibited from giving loans to individuals under debt review.
This is to prevent them from falling deeper into debt and to protect consumers from unscrupulous lenders.
That said, some unregistered lenders (often known as loan sharks) may offer you loans at high-interest rates and dangerous repayment terms.
Engaging with these types of lenders can worsen your situation and put you at risk of harassment, asset seizure, excessive interest rates, and illegal collection methods.
It is important to stay away from loan sharks and consider other safer alternatives.
Alternatives To Taking Out A Loan While Under Debt Review
The alternative way to get a loan while under debt review is to speak to your debt counsellor, access your retirement funds or emergency savings.
You can also sell assets you do not need, speak to family or friends and finally, take a side job or freelancing.
You will need to do the above as an alternative because you cannot get a conventional loan.
Risk Of Taking An Illegal Loan While Under Debt Review
- The risk of taking an illegal loan while under debt review includes paying exorbitant interest, physical or emotional threats if you can’t pay back.
- Also, the seizure of your ID card or bank card as collateral, and falling deeper into financial ruin.
- Some people turn to illegal lenders out of desperation, but this often leads to serious consequences.
- If you have already taken a loan from an illegal lender, contact your debt counsellor, NCR (National Credit Regulator), or the Consumer Protection Office for assistance.
What To Do If You Are Desperate For A Loan While Under Debt Review
If you urgently need a loan while under debt review, you need to do the following things:
- You need to notify your debt counsellor, who may help you restructure payments or access short-term relief.
- You need to avoid illegal Lenders; they may offer quick cash, but at extreme costs.
- Look for income opportunities, even short-term jobs, can help you as an individual.
- Use your assets wisely; you can sell or pawn non-essential items if needed.
Can You Cancel Debt Review To Get A Loan?
Yes, you can cancel a debt review to get a loan, but doing so is very risky. Once you cancel your debt review, creditors may resume legal action.
The legal actions that may start coming your way include repossession of your car or home, judgments or garnishee orders, and negative listings on your credit profile.
In some rare cases, if your financial situation has improved significantly, you can apply for a clearance certificate from your debt counsellor, but this only happens once all debts under review are paid off.
Frequently Asked Questions (FAQS)
Can I Apply For A Personal Loan While Under Debt Review?
No, you cannot legally apply for a personal loan with a registered lender while under debt review.
What happens if I Take An Illegal Loan Under Debt Review?
Taking an illegal loan exposes you to high interest rates, harassment, and the possibility of losing valuable documents or belongings.
Can I Pause Debt Review To Get A Loan?
You cannot pause debt review. To cancel it, you would need to settle all debts or get a court order, and this will expose you to legal actions from creditors.
Is There Any Lender Who Can Help People Under Debt Review?
No legal lender can issue loans to someone under debt review. However, some companies may offer debt consolidation services or voluntary surrender options.
Conclusion
Being under debt review limits your ability to take new credit, including emergency loans. However, it’s a process meant to help you regain financial stability.
If you find yourself in a dire situation and need a loan urgently, avoid illegal options and instead speak with your debt counsellor, tap into savings or pension funds if possible.
Never trade short-term relief for long-term debt. There’s always a safer, legal, and more sustainable way to manage financial hardship, even during debt review.
