Ensure your debt review is history
Make sure all the credit bureaus have expunged from your credit report any reference to your being in debt review
If you were in debt counselling and have since paid off your debts and been issued with a clearance certificate, make sure all the credit bureaus have expunged from your credit report any reference to your being in debt review.
This month, a Western Cape reader had her application for a home loan turned down by Standard Bank on the basis that she is "in debt review", even though she hasn't been in debt counselling for nearly two years.
"I was in debt counselling from 2009 until the end of 2015, when I paid all my debt in full," says Ms N.
"I received a clearance certificate in February 2016 and my debt counsellor e-mailed it to all the credit bureaus."
Yet, for the past seven months, she has been battling to get credit bureaus to reflect that she is debt-free and not in counselling.
"In May, when I applied to be pre-approved for a home loan, I discovered that my credit reports from all the bureaus were reflecting that I was under debt review.
"Once again, my former debt counsellor e-mailed my clearance certificate and 'paid-up' letters from the banks to the bureaus."
It was at this point that Ms N found that an old Standard Bank account was showing an outstanding balance.
She phoned Standard Bank's legal department and was told that her complaint would be referred to all the bureaus and resolved within 21 working days.
"Last month, I followed up with Standard Bank and the issue had still not been resolved, so I went through the process again."
Not long after that Ms N obtained a Discovery credit card and pre-approval for a home loan from one bank, so she assumed her problems were behind her.
"My credit score on my Compuscan credit report was very good and I was found to be eligible for a home loan of R1-million."
But her hopes were dashed earlier this month when a bond originator reported to her that four of the five major banks had declined her application for a home loan due to an outstanding debt from Standard Bank, and Standard Bank had rejected her application on the basis of her being in debt review.
"It appears that the account number listed on my credit report is not the same as the credit card number on the letter from the bank [stating that the credit card debt had been paid in full]. What makes me even more livid is that Standard Bank rejected my application for a home loan on the basis of my being in debt review. I almost missed out on the opportunity to buy my first house because of Standard Bank. I paid my debts in full, and am entitled to a loan based on my clean credit record."
Standard Bank's debt review department has since sent Ms N an apology stating that "the error was due to our systems being misaligned" and that the "debt review indicator" had been removed from her profile.
But there has been no offer of a home loan from Standard Bank, she says.
"Fortunately, Nedbank and Absa approved me for a home loan after we sent them the letter from Standard Bank, showing that the credit card debt was actually paid in 2015."
A clearance certificate is a prescribed form issued by a debt counsellor stating that the consumer is "in the clear" and eligible to access credit again. It marks the end of the debt-counselling process.
If a debt counsellor decides not to, or fails to, issue you with a clearance certificate, you may refer the matter to the National Consumer Tribunal to review that decision - and if the tribunal is satisfied that you are entitled to the certificate, it may order the debt counsellor to issue the clearance certificate you.
The consumer can also complain to the National Credit Regulator if a debt counsellor refuses or fails to issue a clearance certificate.
The law prescribes that the debt counsellor must, within seven days of the issuance of the clearance certificate, file a certified copy of that certificate with all registered credit bureaus and the national register (which has yet to be established by the National Credit Regulator).
Debt counsellor Charl Marais says that in terms of guidelines set by the NCR, debt counsellors may only issue a clearance certificate after creditors have issued "paid-up" letters - but this is not a requirement in the act and is not necessary, because the court order sets out exactly what you, as the consumer, owes.
Credit bureaus must act on receipt of a clearance certificate issued by a debt counsellor, he says.