Blacklisted? How to Clear Your Name
Perhaps you missed a few loan repayments over the last couple of months, or lost your job and couldn’t pay your car or home instalments for a year.
If you find yourself in a situation where you cannot meet your debt repayments, don’t avoid your credit providers– this will only land you in trouble.
To you it may seem just a blip on the horizon, but credit providers will view your failure to make repayments very differently.
When you regularly default on your loan repayments or don’t pay them at all, your credit provider will pass that on to the credit bureaus and you may find yourself blacklisted.
What does it mean to be blacklisted?
Credit bureaus store information about credit consumers for future credit providers to check an individual’s risk profile before extending credit to them, or before making a decision about interest rates.
If you regularly default on loan payments you’ll probably be blacklisted. This means that credit providers won’t offer you any credit.
Depending on the severity of the situation, you can be blacklisted for anything from 3 to 10 years.
For how long will I be blacklisted?
This depends on your financial situation. If you’ve just been sloppy with making your payments, or lost your job and couldn’t pay for a couple of months you’ll be looking at around 3 years before you can access credit again.
If you’ve had a civil court judgement against you, or a rehabilitation order you could be looking at around 5 years.
In the case of sequestrations, which means your property has been seized in order to pay your credit, the blacklisting could last around 10 years.
If you had to file for liquidation, which means declaring bankruptcy, the blacklisting can be indefinite.
I can’t pay my debts – how do I avoid being blacklisted?
Credit providers do not want to blacklist you. It’s in their best interest to reach a negotiation with their clients through which your loan and interest will eventually be paid.
If you find yourself in a situation where you cannot meet your loan repayments, don’t avoid your credit providers– this will only land you in trouble.
Rather face the problem head on. Go and see your loan provider, explain your situation openly and honestly.
It is in the credit provider’s best interest to work with you to find a solution.
Perhaps you can ask for an amnesty period while you are looking for a new job in case of unemployment. Or you can negotiate lower monthly premiums paid back over a longer period of time.
If you communicate honestly with your credit provider you will avoid being blacklisted and maintain financial control.
I’ve already been blacklisted – what can I do?
If you feel you have been unfairly blacklisted you can take your case to the Credit Information Ombudsman (http://www.creditombud.org.za/).
If you could not make your repayments because of circumstances beyond your control, such as losing your job or falling ill, you may be able to clear the blacklisting from your name.
You will have to prove your case by providing proof, such as documents showing your previous employment, dates of when you lost your job and evidence of your employment situation since losing your job.
If you have been blacklisted the best thing to do is to focus on getting your financial house in order.
- First pay off your outstanding debt in full – don’t add more debt during this process.
- Once you’ve paid your debt begin a savings plan to help you avoid the debt trap in future.
- If you’re blacklisted, you’re not alone. As a nation, we are over-indebted and credit impaired.
- Know that blacklisting isn’t a life sentence.
- Check your credit record by signing up to moneysmart.
- If you’re blacklisted, or on the way to becoming blacklisted, take necessary steps to spend responsibly so your loan repayments become first priority.
- For guidance with paying off your debt, moneysmart offers a monthly financial education programme, called the Debt-Defying Action Plan, which is filled with expert tips, tools and advice to help you pay off your debts faster and improve your credit rating.
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