THE TRUTH ABOUT THE CREDIT AMNESTY
Our firm has been inundated with queries regarding the credit amnesty incepted earlier. The various queries portray that there is a lot of misperception regarding this matter. In my opinion the vague naming thereof is one of the main causes for this confusion. Describing it as Credit Information Amnesty would clarify the effect hereof for consumers.
What is Credit Amnesty?
Credit information amnesty is a government initiative that took effect on 1 April 2014. This entails a once-off removal of adverse consumer information, including paid-up judgments, on the credit bureaus that were reflected before the date of inception. In the event of default on your payments, your creditors would eventually have had a judgment granted against you for the outstanding debt.
Consumers often refer to this as “being blacklisted”, because once you have a judgment showing on your credit record, credit providers are very reluctant to grant you further credit.
Prior to the inception of this amnesty, should you have paid off the judgment debt, an attorney would need to be consulted in order to rescind that judgment and remove the judgment status from your credit record.
According to the Regulations published in the Government Gazette, “adverse consumer credit information” is defined as adverse classifications of consumer behaviour such as ‘delinquent’, ‘default’, ‘slow paying’, ‘absconded’ and ‘not contractable’. It further refers to classifications of enforcement action including classifications such as ‘handed over for collection’, ‘legal action’, and ‘write off’.
According to the credit information amnesty, credit bureaus will now have a period of two months to remove approximately 21 million adversely listed consumers.
So in short, should you have a judgment on your record and you have settled this judgment in full, the credit bureaus have to remove all traces thereof from your credit record.
What Credit Amnesty Does Not Mean
The credit information amnesty DOES NOT mean that all your debt is now written off or your obligations towards any of your credit agreements are dismissed. Many consumers are under the impression that this is what the amnesty entails. You are still responsible for your debt repayments and this amnesty does not change any of the conditions of your credit agreements nor does it facilitate any negotiations on these agreements.
This amnesty has various advantages and disadvantages. It would entitle consumers with paid-up judgments to gain access to credit more easily, but at a great risk to themselves and credit providers as the credit providers rely on this information to rate the payment reliability of applicants. I have no doubt that more than half of these consumers would default again in the future as proven by the 2006 amnesty.
Should you have any judgments or are uncertain whether you have, you may request a credit report from any of the credit bureaus. You are entitled to one free credit report per annum and this can easily be done online or telephonically.
Any unpaid judgments need to be settled as soon as possible and the proof thereof be forwarded to the credit bureaus in order to remove the listing from your credit record immediately.
In the event of applying for credit in future, ensure to ascertain all details of the agreement and comprehend your obligations therein and ensure that your financial situation can service the agreement without any risk to you.
Should you have any queries herein you are welcome to contact our office on 041 365 4139 or the National Credit Regulator on 0860 627 627.