11 Feb Loan for Someone Under Debt Review: What the Law Says
If you’re under debt review and in a tricky financial position, you might have considered a loan under debt review.
Loans under debt review are illegal. The NCA (National Credit Act) clearly sets out the conditions under which you may and may not take out a loan under debt review.
The only times you can get a loan while under debt review are if:
- Your debt review application is rejected.
- The court determines that you are not over-indebted and rejects your debt review application.
- You’ve finished debt review.
Let’s discuss what the Act says in more detail.
What the National Credit Act Says
In section 88 (1), the National Credit Act says, “A consumer who has filed an application in terms of section 86 (1), or who has alleged in court that the consumer is over-indebted, must not incur any further charges under a credit facility or enter into any further credit agreement…with any credit provider until one of the following events has occurred:
a) The debt counsellor rejects the application and the prescribed time period for direct filing in terms of section 86(9) has expired without the consumer having so applied.
b) The court has determined that the consumer is not over-indebted, or has rejected a debt counsellor’s proposal or the consumer’s application; or
c) A court has made an order or the consumer and credit providers having made an agreement re-arranging the consumer’s obligations, all the consumer’s obligations under the credit agreements as re-arranged are fulfilled…”
Section 86 (1)
Section 86 (1) describes the debt review application process. It reads, “A consumer may apply to a debt counsellor in the prescribed manner and form to have the consumer declared over-indebted.”
Section 86 (9)
This part states, “If a debt counsellor rejects an application as contemplated in subsection (7)(a), the consumer, with leave of the Magistrate’s Court, may apply directly to the Magistrate’s Court, in the prescribed manner and form, for an order contemplated in subsection 55 (7) (c).”
Section 86 (7) [A]
This says your debt counsellor can reject your application if you control your debt — are not over-indebted.
Section 55 (7) [C]
Section 55 (7) [c] says that your debt counsellor may issue a proposal to your creditors to:
- Recalculate interest rates
- Postpone repayment dates
- Extend your repayment period
- Reduce your debt
If you can’t get a loan, what are your options?
What to Do Instead
If you’re struggling with money, try selling valuables on Facebook Marketplace, Gumtree, or Yaga. If you don’t have anything to sell, talk to your debt counsellor. They may be able to renegotiate with your creditors for some financial breathing room. They could ask for lower repayments, an extended repayment term, or lowered interest rates.
If your debt counsellor isn’t happy to do this, consider switching to Debtco Group. Our team of debt counselling experts work tirelessly to ensure you save the most while under debt review and learn to manage your money well. For years, we’ve assisted South Africans overcome over-indebtedness and live debt-free.
To learn more, contact Debtco Group today. We would love to be of assistance.