Article by listed Attorney: Nanika Prinsloo
We have had a number of enquiries from persons who have been rehabilitated only to find that the banks won’t give them credit, despite what our original article on rehabilitation says. This article will expand on ITC clearances after rehabilitation.
Vir Afrikaans: REHABILITASIE EN KREDIETBURO’S
When you give instruction to an attorney for a rehabilitation application, ensure whether the attorney’s services will include ITC clearance or not. If it includes ITC clearance, you should enquire as to what exactly the ITC clearance entails. We will expand on this below. You will find the cheaper the fee for a rehabilitation application the attorney quotes you, the less they obviously do for you and then they normally do not clear ITC for you.
You will find that some companies say that they do the ITC clearance, only for you to find out later that the bank still won’t give you credit after rehabilitation and that there are still things wrong with your credit record. Some of the credit bureaxxs, and specifically Experian, will sometimes enquire that a judgment against your name be rescinded first before they will remove it. Sometimes the rehabilitation order is incorrectly listed or not at all. So if you find that you cannot obtain credit after a rehabilitation order was granted, make sure that your ITC record was indeed “cleaned” properly and completely and that everything is listed completely. You will find that the less you pay for your rehabilitation (where attorneys undercut fees from prescribed fees) the less they do for you. Having obtained a rehabilitation order does not necessarily include having your credit bureaux record cleared or sometimes not cleared completely.
Any default or summary judgments granted against your name before sequestration must be removed by the credit bureaux as soon as a rehabilitation order is granted. Experian however sometimes refuse to do this. They cannot lawfully refuse to do so and they should be put to task to remove these judgments. Sometimes it takes a bit of a fight but eventually they will have to remove it, as they have no legal grounds not to remove such judgments after a copy of the rehabilitation order was forwarded to them.
Therefore make sure that your credit record shows no judgments. If it shows “Judgment and “0”” after it, it still shows a judgment and the banks will pick it up in their inter-banking system.
Sometimes a creditor can be unaware of a sequestration order and proceed to obtain judgment after a sequestration order was granted. If this is the case, the creditor will have to apply for the rescission of the judgment. This is not the case with judgments granted before the sequestration order was granted, because a rehabilitation automatically dissolves the judgments. Where the judgment was granted after sequestration, whether it was granted erroneously or not, it will have to be rescinded by a Court before a Credit Bureaux will be able to remove it. Not so the case with judgments granted before sequestration – these type of judgments must be automatically removed after a rehabilitation order is granted and an application to court to have it rescinded is not necessary.
Apart from ITC there is also an inter banking system where ratings of your credit record appears. Sometimes your ITC record will show clear but on the inter banking system it may show a judgment. It is these type of judgments that must be rescinded or the credit bureaux approached again to have your record cleaned properly.
After rehabilitation you still need to qualify in terms of “affordability” as prescribed by the National Credit Act. Even if you are rehabilitated and you do not comply with the National Credit Act, the bank will not give you credit. This means that you income versus your expenses must be sufficient so that you can afford the debt you are applying for.
Other reasons why the banks may not give you credit is, as you have probably not incurred any debt for the four years whilst you were under sequestration, is that you do not have a credit record any longer. It would be advisable to try and open small accounts after rehabilitation with clothing companies to build up a credit record again. Unfortunately in our world you do not get awarded any points if you live cash and debt free!
The bottomline is: when a creditor that you apply for credit refuses you credit after rehabilitation, find out the reason for such refusal so that you are able to fix any problem that may exist from there.
This article written by Nanika Prinsloo of Prinsloo & Associates Attorneys.
