Selling a Car That Forms Part of a Debt Review Agreement?

Can you sell a car that forms part of your debt review agreement? Yes! Selling your car during debt review is a great way to make money off of your car and pay off your debt review balance in a shorter period. You’ll still have to make the same repayments, but your balance will be significantly smaller.

Let’s discuss the dos and don’ts of selling your car under debt review, applicable laws, and what to do if your debt counsellor won’t let you sell your car under debt review.

Selling a Car Under a Debt Review Agreement

Before you consider selling your car under debt review before it’s paid off, consider that you’ll need to keep fulfilling your debt review obligations.

Before selling your car, you’ll need to contact your debt counsellor, who will communicate with your credit provider. Your counsellor and provider will need to discuss the terms of your sale to ensure it aligns with your existing debt restructuring plan.

Ask your creditor for the settlement balance–what you owe on the car. Selling your car for at least this amount will allow you to obtain the car’s NATIS (ownership) documents, which will ensure a smooth ownership transfer.

Remember that you won’t be able to buy a new car, unless you buy it in cash, as the National Credit Act says you can’t incur further debt under debt review. If you really need the money, consider pawning it instead.

What If I Sell My Car for Less Than What I Owe?

If you sell your car for less than your settlement amount, you’ll be responsible for covering the remaining balance, called a shortfall.

Whatever you sell your car for, put it towards your vehicle finance balance. This will reduce the total amount you owe.

Do I Have to Get Permission?

Yes. You or your debt counsellor must ask your bank or lender before selling your car. If they agree, the money will go towards paying your outstanding debt.

What Happens If I Sell My Car Without Permission?

Selling your car without permission might breach your loan agreement or debt review terms. If you breach your debt review terms, you risk your agreement being terminated. You could lose all the protection it offers and be liable for your initial credit agreements and their ensuing legal repercussions.

What If My Debt Counsellor Won’t Let Me Sell My Car?

If your debt counsellor won’t let you sell your car, consider changing debt counsellors. To do this, you’ll need to inform your current debt counsellor in writing that you plan to switch. You’ll need to fill in Form 17.7, which documents the switch. Your debt counsellor is unable to refuse the request by law. According to Regulation 15(3) of the Debt Review Regulations, 2017, your current counsellor has no choice but to cooperate.

Ensure all outstanding fees owed to your current debt counsellor are paid. If they’re not, the transfer process will be more complicated. Your current debt counsellor will share your documents with the new one. Your debt counsellor must notify creditors of the switch and repayments must continue as normal or per revisions.

If you would like help selling your car under debt review, contact Debtco Group. We would be delighted to help you make debt review easier.