Frequently Asked Questions
Keen to know more about our debt solutions?
Read our most frequently asked questions below.
What is debt consolidation?
This is a process that combines all your monthly debt repayments into one payment. The main aim is to reduce the installments to provide financial relief to the consumer. Debt consolidation itself is not a specific product, but a term used to represent all processes that aim to achieve this goal.
In South Africa, there are two types of debt consolidation: Debt counselling/review and a consolidation loan. Each of these solutions has unique qualifying criteria and benefits. Vantage specializes in helping consumers determine which option would work best.
How does debt counselling work?
Debt counselling was created to get over-indebted consumers out of debt. An NCR registered debt counsellor will assess your entire financial situation and work out if they can assist you with a new, affordable repayment plan. They will then formally negotiate with all your credit providers to reduce monthly installments and interest rates.
A consent order is granted to formalise the new repayment plan. Payments are made through an NCR registered payment distribution agency that distributes the funds to each credit provider monthly. Once all the debt has been paid you will be issued a clearance certificate. Your credit record will be restored, and adverse information will be cleared.
What does over-indebted mean?
Over-indebted means that your current income is not enough to cover your living expenses and debt repayments. This leaves you with a shortfall in your budget each month. Usually, over-indebted consumers rely on new loans, credit cards and overdrafts to make it through the month.
How quickly do I start with the new, lower repayments?
You can start as quickly as your next pay date.
What is a credit score?
A credit score is a number representing a consumer’s credit risk which is calculated by the various registered credit bureaux. Your credit score is based on your credit profile, repayment history and various other factors. If you have a lot of debt relative to your income, keep applying for new debt and have missed a few payments (known as arrears), your credit score is likely to be low.
If you have a manageable amount of debt that you pay on time each month, you are likely to have a high credit score. Credit providers use this credit score to determine your level of risk and whether they will lend to you and at which interest rate.
Can I take out more debt while under debt counselling?
Due to getting the benefit of reduced interest rates and Installments you will not have access to credit while under debt counselling. This process aims to protect you from becoming further indebted which allows you to focus on paying off your current debt. Once the short-term debt and vehicle is paid off, you will not have any issues applying for credit and you will be in a much better financial position.
Will I be blacklisted forever if I go under debt counselling?
No, debt counselling does not blacklist you. The term blacklisted refers to a negative credit record and a low credit score, resulting in most of your credit applications being denied by credit providers. On the contrary, debt counselling can in fact improve your credit score.
Your credit score is based predominantly on your payment history. Under debt counselling your payment will be affordable for you, this means you can consistently make your payments. Over time, this will increase your credit score and improve your credit record.
Once you complete the process, any records related to Debt Counselling will be removed from your credit profile.
What happens once the debt counselling process is complete? Will I be able to buy a house or a car?
Certainly. Once the debt counselling process is completed you will receive a Clearance Certificate which is also issued to all credit bureaux and credit providers. Any records related to Debt Counselling will be removed from your credit profile. As you will be in a much better financial position, with sufficient affordability, you will be able to apply for vehicle finance, a home loan or any other form of debt.
Can I apply if I am blacklisted?
You are considered “blacklisted” if you are unable to get more loans or new debt from credit providers. This is probably due to a low credit score caused by missed payments, legal action and other adverse information. To improve your credit record, you need to catch up on all arrears and continue full payments for an extended period of time. If your loan applications are being denied repeatedly, you might be over-indebted and in need of debt counselling.
Is there a difference between debt counselling and debt review?
There is no real difference between debt counselling and debt review. Debt review was introduced in 2007 to assist over-indebted consumers. In the early stages the industry experienced some teething issues. In 2013 the NCR introduced stricter rules and regulations to give clients more protection. These amendments to the process have turned it into a successful debt rehabilitation program. As a result of these changes, the process is now formally referred to as debt counselling although the term debt review is still commonly used in the industry.
How does a debt consolidation loan work?
A consolidation loan is essentially a large personal loan used to pay off smaller loans. This loan is typically given at a high interest rate which often makes it an expensive option to take. Credit providers will generally check to see if you have the following: High credit score, no arrears on your accounts and sufficient debt affordability*.
*Affordability is how much money you have left after paying for all household expenses & debts.
Consolidation loans can help you to reduce monthly debt repayments if you have short-term debt with high interest rates. If you have a home loan, vehicle finance or long-term debt, this solution may not be the best for you. If you are over-indebted, you are unlikely to qualify for a consolidation loan.
Does debt counselling affect my house and car?
Your assets are completely safe under the process, provided that severe legal action has not already commenced. We can negotiate better terms on home loans and vehicle finance and include these in the debt counselling process. You will remain in full control of your assets.
How do I know if debt counselling is right for me?
Debt counselling is ideally suited for over-indebted consumers who are struggling with their debt repayments. At Vantage you can go through a quick but thorough assessment with a debt expert who will be able to assess and recommend the right solution for you. You will be informed about all available solutions and you will be recommended a solution with reason. The assessment feedback, along with your credit report, will be sent to you and it is completely free.
I have heard some scary things about debt counselling. Does it really work?
It certainly does. Debt counselling is a formal and highly efficient process created and regulated by the National Credit Regulator (NCR) to help over-indebted consumers repay their debt affordably. It is important to note that the quality of the Debt Counsellor used has a significant impact on the outcome of the process. A good debt counsellor should be registered with the NCR, reduce your interest rates, provide you with sufficient and transparent information with a high level of service at all times. At Vantage, we will provide you with a stress-free experience and address any of your concerns.
Does my spouse get affected by debt counselling?
This is dependent on the type of marriage contract. If you are married in community of property, you and your spouse are jointly liable for both of your debt. This means the process can benefit both you and your spouse by reducing the total debt repayment for the household.
If you have are married out of community of property or with an Ante Nuptial Contract (ANC), it is possible to go through the debt counselling process as an individual.
How long does the debt counselling process last?
Debt counselling usually takes between 24 – 60 months to complete, but it depends on your affordability and debt composition. With Vantage, the process is flexible, meaning that you can pay more into the process at any time to shorten the term. Our goal is to get you debt-free as soon as possible.
How do I repair my credit score?
If you have a low credit score the best way to improve it is to pay your debts on time and catch up on any missed payments. Full and consistent payments over an extended period will positively impact your credit score.
If you have any agreements in legal action i.e. judgment or summons, these need to be settled and removed from your credit profile as soon as possible.
In addition, avoid making excessive credit applications in a short period of time as this will severely affect your credit score negatively.
If you find yourself unable to meet your debt Installments and you cannot catch up on arrears it is very important to speak to a debt management company for advice and to find a solution.
Consolidation Loan Case Study
A consolidation loan is essentially a large personal loan used to pay off smaller loans. Consolidation loans can be beneficial to consumers who are experiencing temporary cash flow problems. Usually a high credit score and a good payment history is required to qualify. One of our debt experts can conduct a free detailed assessment with you to determine if you could qualify for a consolidation loan. We help you identify which factors are affecting your credit scor...
Debt Counselling Case Study
As an NCR registered debt counsellor, we formally negotiate with your creditors to reduce your monthly repayments and interest rates. Typically, monthly debt repayments are reduced by up to 65% and interest rates on unsecured debt are reduced to between 0% - 4%. This can save you thousands of Rands in interest. You will get immediate relief from the first month. Any consumer who is over-indebted can qualify for debt counselling regardless of their credit score an...
Debt Review Case Study
Debt review was introduced in 2007 to assist over-indebted consumers. This gave consumers a new option to address their debt problem instead of using sequestration or administration. In the early stages the industry experienced some teething issues. In 2013 the NCR introduced stricter rules and regulations to give clients more protection. Some of the major changes included introducing compulsory use of a registered payment distribution agency and a standardised m...