Debt counsellor’s advice to avoid being blacklisted

Under lockdown conditions, many people are struggling to make ends meet and keep up with debt repayments. It is however, as far as possible, not advisable to get yourself blacklisted, says advocate Pat Molepo, a registered debt counsellor and the CEO of the Community Law Centre in Seshego.

Being blacklisted means you are a liability when it comes to paying your debt, and blacklisting serves as a track record for not paying your accounts and meeting your financial obligation, he says.

“One is blacklisted when certain negative information is placed on your credit bureau profile. This is a listing of your credit history, both negative and positive. Immediately when you fall into arrears, you will be listed with any registered credit bureau. This information is placed by your creditors whose accounts you did not honour as per agreement or by the legal practitioner who have been tasked to collect on the account.”

When you are blacklisted, you won’t be able to qualify for credit and blacklisting could even affect your job prospects. You will not be able to buy a house, car, furniture or anything on credit due to your bad credit history. In some instances, it will prevent you from marrying in community of property as debt is seen as part of a joint estate.

But it isn’t all doom and gloom, says Molepo. The National Credit Act, Act 34 of 2005 stipulates that if you were blacklisted and have paid the debt for which you were listed, you may apply to the credit bureau where you were listed to have your name removed from the list.

“Should this not be done, you can apply at your local magistrate’s court for a cancellation of that listing. In most instances, your debt is listed at the credit bureau for a certain duration and when that time period lapsed, the credit bureau will automatically remove your name as prescribed by law,” he adds.

Molepo explains that should credit providers have advanced credit to you recklessly without ever doing affordability assessments, then you can still apply to court or any credit regulator to have some cancelled and your information updated accordingly at the relevant credit bureau.

To clear your name, it depends on how long the negative information impact your creditworthiness on your credit report.

“Both your positive and negative repayment information is stored on the credit bureau database. If your instalments are consistent and fully repaid every month, credit grantors will see that you are a reliable payer and this information will stay at your credit profile for three years,” he says.

During the national lockdown a lot of people are financially not able to make debt payments. If a consumer has defaulted, but pays 50% of the required instalment, this will reasonably show that the consumer was not wilfully defaulting, but that was the amount which the consumer was able to afford, and should the consumer be listed, he or she can seek relief from the courts, Molepo advises.

“Consumers should by all means possible make arrangements with their credit providers in advance. Many credit
providers understand the hardships in this difficult time, but it is truly not a bona fide defence as such,” he explained.

To avoid getting blacklisted, Molepo provides these guidelines:

1. Pay your instalments on time.
2. Answer your phone and any letters received from your credit provider.
3. Never get credit on behalf of someone else, your name and identity are yours and yours only.
3. Should you be unable to pay due to circumstances, communicate with your creditors and make payment arrangements.
4. Should your employer have financial constraints, apply for UIF benefits.
5. Check your free credit report from any registered credit bureau.
6. Don’t rob Peter to pay Paul.
7. Buy things only when needed and have a budget to which you stick to.
8. Be honest and build a good relationship with your credit provider.
9. Be truthful when you complete a credit application.
10. Consult a registered debt counsellor should you have financial problems.

Originally appeared on Review Online 

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