Are you under debt review and in need of a loan? Unfortunately, you cannot get a traditional loan until you have completed the debt review process.

You can, however, secure a short-term loan using one or more of your fully-paid assets as collateral. Here’s what you need to know about debt review loans.

How debt review works

Debt review (or debt counselling) is a legal debt rehabilitation process overseen by the National Credit Advisor to assist South African consumers who are over-indebted.

The process assists consumers to repay retail accounts, credit card debt, car finance, bonds and other loans, in order to avoid blacklisting, repossession and legal action by creditors.

Once you make an application for debt review, a counsellor will assess your outstanding debt and renegotiate interest rates and debt repayment terms with your creditors. The counsellor will then devise a viable payment plan and monthly budget, which will allow you to repay your debt while still having enough money to live off.

Once under review, you’ll only be required to make one payment each month to a payment distribution agency, who will pay your creditors on your behalf. You’re legally protected by the National Credit Act and creditors are no longer allowed to hassle you, take legal action (or further legal action) against you or blacklist you.

Because the purpose of debt counselling is to rehabilitate your finances, it’s stipulated in the National Credit Act that you’re not allowed to take further credit while under debt review. That means traditional lenders, like banks, will turn down any application you make for a loan.

Getting a loan while under debt review

If you find yourself under debt review but needing a loan, there is an option open to you – you can get a short-term, asset-based loan from Lamna.

With this type of loan, you use a valuable asset you own, such as a car, artwork, an antique or jewellery, as collateral for the loan. Interest rates are in keeping with National Credit Act and, once you’ve paid off the loan and the agreed interest, your asset will be returned to you.