Debt review is a legal process that's designed to help individuals manage overwhelming debt while protecting them from legal action by creditors. However, once you’ve completed the process, it's essential to understand when and how you can return to normal financial activities. This blog will answer some key questions, including:
- How do I know if my debt review flag has been removed?
- When can a credit provider terminate a debt review?
- Can creditors decline debt review?
- Can I get a loan after being removed from debt review?
- How to improve your credit score and other key factors to consider as you exit debt review.
How Do I Know If My Debt Review Flag Has Been Removed?
Once you exit debt review, it's crucial to ensure that the debt review flag is removed from your credit profile. This flag indicates that you are under debt review and restricts access to new credit. Here’s how to know if it’s been removed:
- Obtain a Clearance Certificate: After settling your debts and completing the process, your Debt Counsellor should issue a clearance certificate. This document confirms that you have met your debt obligations and can now be removed from the debt review process.
- Check Your Credit Profile: After receiving the clearance certificate, your Debt Counsellor will notify the credit bureaus to remove the debt review flag. You can check that the debt review flag has been removed by checking your credit report.
If you still have the debt review flag on your credit report and you've completed the debt review process, we can get it removed for you by issuing you with a debt review clearance certificate. Start your application now:
When Can a Credit Provider Terminate a Debt Review?
Credit providers are bound by the debt review agreement/ retrstuctured repayment plan as there is a court order in place. However, a credit provider may terminate debt review if you do not make your debt review monthly payments. By not making your monthly payments you are not adhering to your restructured repayment plan.
Before a credit provider can take legal action or terminate the debt review, they must follow specific legal procedures, including providing notice.
Can Creditors Decline Debt Review?
Technically, creditors can decline debt review proposals. When a person applies for debt review, a Debt Counsellor works with creditors to restructure repayment terms. If a creditor feels that the proposed terms are unfavorable or do not adequately cover their financial interests, they can reject the proposal.
However, creditors must provide valid reasons for declining, and the debtor can approach a court if the creditor’s refusal seems unjust. This very rarely happens as debt review serves a creditor too in that they will be getting consistent monthly repayments for your debt.
Can I Get a Loan After Being Removed from Debt Review?
One of the most common questions after debt review is can I get a loan after being removed from debt review? The short answer is yes, definitely. Debt review is not a criminal record or life sentence. You will be able to secure a loan after the debt review process and you may even be in a better position to do so because debt review is a way of rebuilding your credit score.
Before applying for new credit, allow some time for credit bureaus to update your credit report. We also recommend that you:
- Start with smaller loans: This will help you get back into the habit of slowly building a credit profile and consistently making those payments again. You also do not want to get yourself back into a state of over-indebtedness.
- Review the credit agreement and look out for the interest rate on your loans as this will affect your monthly repayment and how long you will have to repay the loan.
Debt review is an opportunity for you to improve your financial situation
Once you have successfully completed the debt counselling (debt review) process, remember you have shown that you can consistently pay your creditors. You are now in a better position to take on credit and continue slowly building a credit profile to secure more credit and loans in the future!