12 Feb Avoiding Debt Review Scams and Malpractice
How do you know how to spot debt review scams and malpractices? What qualifies as malpractice or a scam? Most importantly, what impact can they have on your financial health?
We’ve all seen those Facebook ads for debt review that promise you loans even when you’re under debt review. Usually, they read a little something like this (quoted directly from Facebook): “LOAN AVAILABLE FOR YOU ARE YOU STILL STRUGGLING TO GET LOAN, DUE TO YOU ARE BLACKLISTED, LOW CREDIT SCORE, OR DEBT REVIEW, THIS IS YOUR OPPORTUNITY TO APPLY FOR YOUR LOAN WITH BIG AMOUNT YOU NEEDED SAME-DAY APPROVAL. CONTACT US THROUGH WHATSAPP MESSAGE.”
The internet is rife with ads like these:
Eloquently written, alluring, and persuasive ads like these may seem like the perfect solution to clearing your credit and exiting debt review. Sounds too good to be true, right?
That’s because they are. No authorised credit provider would ever provide you with a loan when you’re under debt review, as this qualifies as reckless credit.
How to spot debt review scams
It’s important to be able to spot debt review scam companies or individuals, or even legitimate companies operating under malpractice.
About debt review
Debt review is the process of reviewing your finances in collaboration with a debt counsellor to negotiate with creditors, the end goal being consolidating all your debt into one monthly payment with lower interest rates. Once you enter debt review, the ITC and other credit bureaus place a debt review flag on your credit record, disqualifying you from taking out further credit. It’s an arduous process, lasting anywhere from 3 to 5, or even more years.
Red flags of debt review schemes
This is what to look for when spotting scams.
Upfront fees
Agencies that ask for payment upfront are fishy, as reputable agencies only ask for fees once they have restructured your debt successfully.
Quick fix
Entities that claim they can provide debt relief quickly are almost always scammers. Debt review is anything but fast and easy.
Unregistered debt review practitioners
If someone isn’t registered on the National Credit Regulator’s website, they are unfit to structure debt and probably trying to take you for a ride. Read online reviews, ask family and friends for recommendations, and check the NCR website for disciplinary actions against DRPs.
Vague documents and explanations
According to South African contract law, a contract is not valid unless you sign it with full understanding. Also, you should choose a DRP (debt review practitioner) that clearly explains the fees, process, and risks involved.
How to protect your financial health
It’s important to protect your financial health, as this dictates your freedom and the rates you’ll get when entering into future financial agreements.
Independent advice
Contact a registered debt counsellor to help you on your way to debt review. We recommend Credit Boost.
Be wary of social media
If you see ads like the ones above. Don’t walk, run!
Educate yourself
The more you understand about debt review and the legislation governing it (hint: read the National Credit Act 34 of 2005), the better you’ll be able to guard your financial health. Have a look at our blog section to find more information and answers to debt review concerns.
Qualified debt review specialists
Credit Boost is a registered financial service provider, with experts of sound legal education, and years of experience assisting those in financial hardship. Contact us now for help exiting debt review.