If you’re feeling uncertain or overwhelmed, remember that your Debt Counsellor is there to guide you every step of the way. Together, you can navigate these challenges and work towards a brighter financial future.

 

Here’s What You Need to Know:

Debt Review is a legal process that provides protection for over-indebted consumers and helps them gradually repay their debt through a structured repayment plan. However, some clients may wonder if they can clear the Debt Review notification on their credit profile by simply stopping payments, even if they still owe money to creditors. Here’s the truth about what happens in this situation.

Understanding the Debt Review Notification 

When you apply for Debt Review, a flag is added to your credit profile, notifying creditors that you are under Debt Review. This flag is meant to protect you from legal action by creditors while your debts are being restructured and repaid according to the agreed plan. 

The Debt Review notification is only removed once all qualifying debts have been settled and a clearance certificate has been issued by your Debt Counsellor. It is not a temporary status that can be erased without fulfilling the legal requirements.

 

What Happens if You Stop Paying Debt Review? 

If you stop making payments under your Debt Review plan but remain indebted to creditors, several things can happen: 

1. Loss of Protection: You lose the legal protection provided by the Debt Review process. Creditors can take legal action to recover the money you owe, which may include repossessing assets or obtaining court judgments.
2. Impact on Your Credit Profile: The Debt Review flag will remain on your credit profile, and your non-payment will be reflected as defaults. This can significantly damage your credit score and make it difficult to access credit in the future.
3. Debt Review Cancellation: Your Debt Counsellor may be forced to terminate the Debt Review process due to non-compliance. This puts you back in a vulnerable position with creditors.
4. Ongoing Debt Obligations: Simply stopping payments does not erase your debt. Interest, penalties, and fees will continue to accumulate, making it harder to repay what you owe.

 

Can You Clear Your Name from Debt Review Without Paying Off Your Debt? 

No, you cannot clear the Debt Review notification from your credit profile if you still owe money to creditors. The process is designed to ensure that all debts are repaid before the Debt Review status is removed.

 Here’s why: 

– Legal Compliance: Debt Review operates under the National Credit Act (NCA), which mandates that debts must be settled before the process can be concluded. 

– Clearance Certificate Requirement: A clearance certificate, issued by your Debt Counsellor, is the only way to remove the Debt Review flag. This certificate is only granted once all debts (excluding a home loan in some cases) have been fully repaid. 

 

What Are Your Options? 

If you’re struggling to keep up with your Debt Review payments, there are steps you can take to avoid jeopardizing your financial recovery: 

1. Speak to Your Debt Counsellor: Inform your Debt Counsellor about your situation as soon as possible. They may be able to renegotiate your repayment plan with creditors to make it more manageable.
2. Avoid Abandoning the Process: Stopping your payments without a plan will only make things worse. Stay committed to the process and seek support from your Debt Counsellor.

 

Conclusion 

While it might be tempting to think that stopping payments will provide an easy way out of Debt Review, the reality is that it only leads to more financial and legal challenges. The Debt Review process is designed to help you responsibly repay your debts and achieve financial freedom in the long term. By staying committed to the process and working with your Debt Counsellor, you can ensure that your name is cleared legally and permanently—once your debts are settled.