If you are currently under debt counselling, you may wonder if you will be “blacklisted.” The short answer is no. Consumers in debt counselling carry a debt counselling flag on their credit profiles, indicating they are over-indebted but not blacklisted.
Debt Counselling – What is it?
Debt counselling serves as a legal process that helps consumers manage their debts. When a person applies for debt review, the National Credit Regulator registers their information on the Debt Help System (DHS). This registration prompts all credit bureaus to place a flag on the consumer’s profile.
This flag signals that the consumer receives help with their debts. Importantly, being in debt counselling does not mean you are blacklisted. Instead, it shows that you take responsible steps to manage your financial situation.
The Difference Between Being Blacklisted and Debt Counselling
Many people confuse debt counselling with being blacklisted. In reality, a blacklisted status typically occurs when a judgment or default records on your credit profile. Judgments carry serious implications, including difficulty in obtaining loans and higher interest rates.
Conversely, debt counselling represents a proactive measure. Lenders often view it positively. As you work towards paying off your debts, your financial situation can improve. Once debts settle, a clearance certificate issues. This certificate goes to all creditors and credit bureaus, leading to a recalculation of your credit score.
Why Debt Counselling is Better Than Being Blacklisted
Applying for debt counselling usually benefits you more than being blacklisted. While both situations affect your credit profile, debt counselling offers a way to regain control of your finances. With debt counselling, you receive the opportunity to repay your debts in a structured manner.
In contrast, being blacklisted can lead to long-term financial difficulties. A judgment against you may linger on your credit report for years, making it challenging to secure new credit. Thus, engaging in debt counselling remains a safer option.
Take Note
You will not be blacklisted if you are under debt counselling. Instead, a debt counselling flag will appear on your profile. This indicates that you work to resolve your financial issues. By choosing debt counselling, you take a positive step toward financial recovery. Always remember, understanding your credit status is essential for making informed financial decisions.
