Many South Africans dream of the day they become debt free. For some – this may never happen, but with major developments in the debt industry, it is becoming easier to achieve this goal. Consumers who successfully pay off all of their debts receive a clearance certificate. A clearance certificate is a form of proof that they are now debt free. How exactly does one achieve this? Let’s find out.
Most employed, adult South Africans have some form of debt. Be it a credit card, a personal loan, an overdraft or vehicle financing, debt is a big part of our lives. As a nation we are notoriously bad at budgeting, saving and paying off debt. According to a World Bank Report in 2015, almost half of credit-active consumers in South Africa are in one or more month’s arrears on a credit agreement.
Which Debt Management Options Are Available To Me?
There are a few options in the market for consumers struggling to manage their debts. Credit providers, debt professionals and other private companies offer debt solutions. They aim to help people understand and manage their debts.
- Debt Management – Offered by credit providers, credit bureaus and debt counsellors. Debt management aims to assist consumers through educating and advising on how to better manage money. This often includes money and budgeting tools, credit report advice and other tips.
- Debt Consolidation Loan – A consolidation loans is a loan granted by credit providers to consumers that have a number of debts. The loan is used to pay off all other smaller debts and then be left with one larger loan. These loans are difficult to qualify for as often it is risky consumers with low credit scores seeking them.
- Debt Counselling – A process designed for over-indebted consumers. Debt counsellors reduce monthly payments and interest rates by formally negotiating with credit providers. The aim is to create a debt repayment plan that is in line with the consumers budget.
Pay Off Your Debt By Sticking To A Plan
Whether its your own plan, or one that a debt counsellor has set up for you, make sure you stick to it. Pay your full monthly instalment and do not short-pay or miss payments. You will be hit with large penalties and further interest charges if you miss payments or short-pay. A clearance certificate is the goal for those that are in debt. By sticking to a plan and committing to make payments, you can get yourself out of debt.
How Do I Get A Clearance Certificate?
Debt counselling is the only solution that prohibits consumers from taking out any additional debt whilst under the process. The credit bureau flags your credit report when you enter the process. This is why it is such an effective solution and has a high success ratio. Debt counselling clients receive their clearance certificate once all of the debt has been settled.
When Will I Get A Clearance Certificate?
The debt counselling flag gets removed from the clients credit report once the process has been completed. Depending on the credit profile and unique circumstances of a client, debt gets settled in roughly 36-60 months. Although many people assume that they can get straight back into the credit market, sometimes it takes a bit of time for the bureaus and credit providers to update their systems.
It is important to have a look at your credit report regularly, as this is to ensure that all records have been updated and that all information is correct. Your credit report is dependent on the bureaus and the banks to update information correctly. Errors can easily occur and it is better to fix these sooner rather than later.
Benefits Of A Clearance Certificate
A clearance certificate is a document stating that all of your debts have been settled. There is no more debt left to pay – you are now debt-free. Your clearance certificate, along with the updating of the credit bureaus, is all you will need to start building a new, strong credit history. Once cleared of all flags and your credit information is correct, you can enter the credit market again should you wish to do so.
For more info or a free consultation – contact Vantage Debt Management.