Loans, no matter what title added to it, all serve the same purpose, which is to provide individuals with a set figure of money to pay for expenses, educational tuition, to buy a car or a home, as well as to settle one’s debt in some cases.
Since residents living in South Africa are experiencing tough economic times, those who are under debt review might want to rethink their options to repay the money they owe.
The National Credit Act (NCA) unfortunately does not permit loans during the debt counselling process to those that cannot afford their debt. Loans, including debt consolidation, may only worsen matters for the individual that is undergoing debt review, which is why it is strictly not permitted.
The Noticeable Difference Between Debt Counselling and Debt Consolidation
Debt consolidation has helped some individuals to repay their debt in the past. However, when undergoing debt counselling, the rules are simple and strict. One is thus, not allowed to take out a loan or any additional means of credit, nor make use of current credit accounts or credit cards.
Considering that debt counselling allows you to pay off your debt in a legal and efficient manner, it makes sense that the NCA doesn’t allow individuals to take on more credit/ loans to pay their current debt.
If this was allowed, residents in South Africa would struggle even longer to pay off their debts, leaving the country in an even bigger crisis, especially because there are already too many people experiencing problems with debt.
The NCA introduced the debt review solution in 2007, to offer legal debt relief, with the purpose to solve the debt crisis of over-indebted consumers. The Credit Act has helped many consumers repay their credit cards, home and car loans, retail accounts, and more. The implementation of debt review has provided debt relief, helped residents avoid blacklisting, repossession, as well as garnishee orders.
If the goal of debt review is to settle all your debts once and for all and guide you on what not to do when it comes to managing credit and budgeting, then the NCA has succeeded. If debt consolidation was allowed, the country’s residents would remain in debt and continue to suffer the long-term consequences thereof.