According to the latest records, just under 50% of all economically active South Africans have some form of ‘ credit challenge ‘ which makes it difficult for them to obtain a home bond or any other form of finance from the financial institutions.
Depending on the severity of the original misdemeanour, says Lawrence, the rehabilitation process can take anything from three to twelve months.
This is according to Rob Lawrence, national manager of Rawson Finance, who says
he and his colleagues are regularly asked by bond applicants to “try and sort these matters out”.
He says the good news is that there are now organisations dedicated to rehabilitating those whose credit records would normally prevent them from borrowing again.
Depending on the severity of the original misdemeanour, he says, this process can take anything from three to twelve months – but, as the ultimate success rate is high, it is very definitely worth tackling the challenge.
Certain issues, says Lawrence, can be quickly put right, for example, if the Credit Bureau’s investigation reveals that the client generally pays his bills but does so irregularly or late, i.e. that his problem is not so much a lack of funds but poor organisation, the rehabilitation organisation can assist him to budget and plan better and thereby improve his credit profile. He could then become credit worthy within six months.
If, however, the client has had a court judgement against him on account of an unpaid debt, this will be recorded permanently on his record. It can then take up to a year to get a “recession order” from the courts and the judgement cleared. This will, among other things, involve the complete repayment of the original debt.
Certain debt defaulters, says Lawrence, have garnishee orders against them. These, imposed by the courts, make it compulsory for their employers to repay their creditor or creditors a fixed sum each month. Any bond applicant in this situation, says Lawrence, will not be considered for a loan until his debt is fully paid up.
If the Credit Bureau’s records show that at some stage the client’s debt had actually to be written off by the creditor, it will take at least a year to get him rehabilitated – and, again, this will involve repaying the debt in full.
Lawrence says that although South Africans’ debt repayments performances are not something we can be proud of, he and his team understand how it is possible for people to land up in these predicaments and they are always willing to go the extra mile in helping debtors rehabilitate themselves – with the help of their associate rehabilitation services organisations.
“Do not despair and do not abandon plans to become homeowners,” he says.
There is almost invariably a way out of these difficulties, says Lawrence, especially if the original fault was due to hardship rather than a deliberate attempt to avoid payment.
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Thanks to news letter, this is great information for someone like me I’ve got so many debts but I really need to buy a house , with so much debts I have I think its impossible for me to get a home for my family I really need assistance to get rid of all the debts and have my life back on track. - Helen
I wish one day we could have a company that will come and take over this portfolio(people with poor credit record irrespective of their situation) because from what i have seen almost 40%-50% of these clients do have an affordability and show remorse the reason being that at the time they were confronted with this situation it was beyond their means and the time salaries paid were too little and some it is situations beyond their control that caused all of these. We see lots of these client being turned away by their respective bank which is really sad. The systems put in place to my own assessment are very insensitive; ill-informed and no discretions from the manager’s side to decide on the matter(i.e why can’t an institution decide to rehabilitate a client itself which is much more less expensive and less stressful and very convenient by just allowing much bigger bond based on the valuation of the property and consolidate his debts and see what will happen). Client are still paying the price of higher interest rate anyway and the argument here is that he is priced according to his personal credit scoring and so you tell me what is the point of them saying that you need to have a clear credit record in order to secure finance which i find it very appalling. - Concerned customer
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