The Process of Debt Review Removal When You Have Settled All of Your Accounts or Left with a Home Loan (Bond)

Debt review can be a lifeline for those struggling with overwhelming debt. However, once you’ve settled your accounts, you naturally want to move on. This article explores how to achieve this through a clearance certificate, as outlined in Section 71 of the National Credit Act (NCA)

Understanding Clearance Certificates

Section 71 of the National Credit Act empowers you to request a clearance certificate from your debt counsellor after completing your debt rearrangement plan. This certificate verifies that you’ve fulfilled all obligations under the plan and are no longer under debt review.

Process of obtaining a Clearance Certificate

The process involves two steps:

1. Contact your debt counsellor and formally request a clearance certificate.
2. The counsellor will investigate your debt rearrangement and assess if you’ve met all your obligations as per the agreement.

There are two possible outcomes:

1. If you’ve successfully settled all debts included in the plan, including your home loan if applicable, the counsellor will issue a clearance certificate in the prescribed format. (A clearance will be issued even if you are only left with your bond & the repayments are up to date)
2. If obligations remain outstanding, the counsellor will refuse to issue the certificate. (A debt counsellor can also refuse to issue the clearance certificate if you owe fees).

Dispute Resolution

If your clearance request is denied, you have the right to appeal. You can approach the National Credit Regulator’s Tribunal to review the decision. If the Tribunal agrees you deserve a certificate, it can order the counsellor to issue one.

Benefits of a Clearance Certificate

A clearance certificate allows you to:

• With the debt review flag removed from your credit report, your credit score can begin to recover. This makes it easier to access future credit on favourable terms.
• A clean credit report signifies financial responsibility and can open doors to new opportunities like renting an apartment or applying for a mortgage or vehicle finance.

Important Note

The clearance certificate only applies to debts specifically included in the debt rearrangement plan.

• If your home loan was part of the plan and you’ve settled it along with other debts, the certificate will apply, and you can exit debt review.
• If your home loan was not included in the plan, it will not be affected by the clearance certificate and will likely remain on your credit report. However, your positive payment history on the home loan during debt review can still contribute to a good credit score.

By understanding the clearance certificate process, you can take control of your financial well-being after debt review. Remember, consulting with a registered debt counsellor is always recommended if you have questions or require further guidance. You can find a registered debt counsellor near you by contacting the National Credit Regulator at 0860 627 627 or visiting their website at (ncr.org.za)

Additional Resources:

• National Credit Act (NCA): National Credit Act [No. 34 of 2005]
• National Credit Regulator (NCR): National Credit-Regulator

Real-Life Example “Clearance Certificate (Form 19)”

Sarah, a single mother of two, found herself struggling with overwhelming credit card debt. Unable to keep up with minimum payments, she contacted a registered debt counsellor and entered debt review. The debt counsellor included all her credit cards in the debt rearrangement plan.

After two years of diligently making her monthly debt review payments, Sarah successfully settled all her credit card debts. She then contacted her debt counsellor and formally requested a clearance certificate.

The debt counsellor reviewed Sarah’s case and confirmed that she had fulfilled all her obligations under the debt rearrangement plan. The counsellor then issued Sarah a clearance certificate (Form 19).

With the clearance certificate in hand, Sarah could now:

• Exit debt review: This meant she was no longer subject to the restrictions of the program and could manage her finances independently.
• Improve her credit score: The debt review flag would be removed from her credit report, allowing her score to gradually recover over time.
• Access new credit opportunities: With a better credit score, Sarah would be in a stronger position to apply for loans or credit cards with more favourable terms in the future, if needed.

It’s important to remember that Sarah’s experience is just one example. The specific details of your situation, including the debts included in your debt review plan and your home loan situation, will influence the process of obtaining a clearance certificate.

Therefore, consulting with a registered debt counsellor is always recommended to discuss your individual circumstances and receive personalized guidance.

Removal of record of debt adjustment or judgment

(1) A consumer whose debts have been re-arranged in terms of Part D of this 45 Chapter, may apply to a debt counsellor at any time for a clearance certificate relating to that debt re-arrangement.
(2) A debt counsellor who receives an application in terms of subsection (I), must-
(a) investigate the circumstances of the debt re-arrangement; and
(b) either-

(i) issue a clearance certificate in the prescribed form if the consumer has fully satisfied all the obligations under every credit agreement that was

subject to the debt re-arrangement order or agreement, in accordance with that order or agreement; or

(ii) refuse to issue a clearance certificate, in any other case.

(3) If a debt counsellor refuses to issue a clearance certificate contemplated in subsection (2)(b)(i) the consumer may apply to the Tribunal to review that decision, and if the Tribunal is satisfied that the consumer is entitled to the certificate in terms of subsection (2)(b)(i), the Tribunal may order the debt counsellor to issue a clearance

(4) A consumer to whom a clearance certificate is issued in terms of this section may file a certified copy of that certificate with the national register established in terms of section 69 or any credit bureau.

(5) Upon receiving a copy of a clearance certificate, a credit bureau, or the national credit register, must expunge from its records-

(a) the fact that the consumer was subject to the relevant debt re-arrangement order or agreement;

(b) any information relating to any default by the consumer that may have-

(i) precipitated the debt re-arrangement; or

(ii) been considered in making the debt re-arrangement order or agreement; 20

and

(c) any record that a particular credit agreement was subject to the relevant debt re-arrangement order or agreement.

(6) Upon receiving a copy of a court order rescinding any judgment, a credit bureau

(7) Failure by a credit bureau to comply with a notice issued in terms of section 55,

certificate to the consumer. must expunge from its records all information relating to that judgment. in relation to this section, is an offence.

Section 71 of The National Credit Act