Q: Can I Get Credit While in Debt Review? (2024)

FAQs

Q: Can I Get Credit While in Debt Review? ›

The main drawback is while you're under debt review you won't be able to apply for any additional credit. The purpose of debt review is to organize your debt and make your payments more manageable.

A: As a rule, no. It will be seen as reckless since being in Debt Review means that you are not able to pay your current debt. Therefore, the National Credit Act (NCA) prohibits you from acquiring any further credit while you are in Debt Review.

And just a quick reminder: Some card companies void the benefits of a debt management program – lower interest rates, reduced monthly payment – if the consumer applies for new credit cards, while on the program. That penalty does not extend to car loans, mortgages, student loans and other types of debt.

Even if you're in a DMP, your creditors may still record that you've missed payments, as you'll be paying less than you agreed to when you took out the original credit agreement. This will mean you could find it harder to get credit while you're making reduced payments and for some time afterwards.

Because credit bureaus may take some time before updating your credit profile, we recommend waiting for about 3-4 months after receiving your credit clearance certificate. During this time, you can monitor your credit report to see if the debt review flag is still on your profile.

Importantly, there are legal requirements in place to ensure the prompt removal of the debt review flag. Credit bureaus are obligated by law to remove the flag within 21 days of receiving the clearance certificate.

This is generally 60 months that is 5 years. This is the most that credit providers can accept. What this means is that the amount that we will propose to pay every month should at least pay off the outstanding debt within 5 years.

Your Bank Account & A Debt Management Plan

In conclusion, a Debt Management Plan (DMP) does not directly affect your bank account. You can usually continue using your current bank account as usual when you enter a DMP providing that you do not wish to include a debt on your DMP that is with your bank account provider.

After 6 years, the negative information recorded on your credit file will start to disappear. However, this doesn't mean you're automatically debt-free or that your credit score will immediately improve. It's important to continue making your DMP payments and practicing good financial management.

The cons of Debt Management Plans

Creditors require the accounts to be closed in order to be put on a DMP. This can slightly lower your credit score, because closing multiple accounts at the same time affects the length of your credit history.

What are the disadvantages of debt review? ›

Cons (disadvantages) of debt counselling

When you are under the debt review (debt counselling) process, you will no longer be able to take out anymore credit. This means that any loans or credit you apply for under the process will very likely be rejected.

To terminate the debt review process and to have the debt review notice removed from your credit reports requires that a court application be made for the court to find that you are not over-indebted, even if there is no court order in place for your debt review.

REMEMBER: The Debt Review process is NOT a payment holiday but instead offers you a lifeline to afford your daily living expenses while also taking care of your debt responsibilities and avoiding repossession of your assets.

You will not be able to open new accounts while under Debt Review, however you can open a new bank account. A difficult reality facing over-indebted consumers is their inability to cope with the various debt repayments in their name.

With this being said, not everyone can qualify for debt review and there are instances where it can be declined. Below is a list of those scenarios: Your current budget allows you to comfortably pay your debts at the current interest rates. You do not have enough debt to qualify.

In most cases, getting to the end of the review process faster can be as simple as paying extra, either as one lump sum or by paying a little extra every month. Here is a list of practical ways to help you get out of debt faster.