What to expect when getting a Clearance Certificate with Debt Counselling

Debt has become an all-too-common part of modern life, but what happens when you're ready to step out of its shadow? One crucial step in this journey is obtaining a debt review clearance certificate. This document signifies that you've completed debt counselling and are free from the burden of past debts. But what does this process entail, and how long does it take? Let's dive in.

What is a Debt Review Clearance Certificate?

A debt review clearance certificate is a legal document that proves you have settled all your restructured debts under debt counselling. This certificate is crucial as it removes the debt review status from your credit profile, leading to what is known as 'credit clearance.'

How to Get a Debt Counselling Clearance Certificate

Obtaining this certificate involves several steps. First, you must complete all the repayments under your debt counselling plan. Then, your debt counsellor will issue the certificate and submit it to credit bureaus and creditors, indicating that you have fulfilled your obligations.  As per the National Credit Act, you become eligible to receive a clearance certificate when:

• Your unsecured debt is paid.

• Your bond/mortgage or long-term agreement payments are up to date.

• Your debt counselling fees are paid up.

• All three of these must be completed to receive your certificate.

How Long Does it Take to Get a Clearance Certificate?

The time it takes to receive a clearance certificate can vary. Generally, it depends on the duration of your debt repayment plan and how quickly your debt counsellor processes the certificate. It can range from a few weeks to several months. Here are a few factors which contribute to how long it takes to get your clearance certificate. 

Length of Debt Repayment Plan

Typically, a debt repayment plan under debt counselling is tailored to your financial situation. This plan could span anywhere from 12 months to 5 years, depending on the amount of debt and your capacity to pay. The faster you complete your repayments, the sooner you can initiate the process for obtaining your clearance certificate. It's essential to understand that the certificate can only be issued once all the debts included in the plan are fully paid.

Efficiency of Debt Counsellor

After you've cleared all your debts, your debt counsellor plays a crucial role in the next phase. They are responsible for verifying that all debts are paid and issuing your clearance certificate. The speediness of this process can vary significantly based on the counsellor’s workload, efficiency, and the systems they have in place for processing these certificates. It’s advisable to choose a counsellor who is known for their promptness and efficiency.

Communication with Creditors

Another factor that can affect the timeline is how quickly your creditors update your payment status. Your debt counsellor must confirm with each creditor that your debts are fully settled. If there are delays from the creditors' side in confirming the payments, this can extend the time it takes to receive your certificate.

Post-Debt Review: Clearing Your Name

The completion of the debt review and receipt of your clearance certificate marks the beginning of the process of clearing your name from the debt review status. This process is crucial for restoring your financial reputation and creditworthiness. Here are the steps involved:

Issuance of the Clearance Certificate

As mentioned earlier, once you complete all payments, your debt counsellor issues a clearance certificate. This document is then submitted to all relevant creditors and credit bureaus.

Updating Credit Records

The credit bureaus update your credit profile upon receipt of the clearance certificate. This update involves removing the debt review flag from your profile. It's essential to ensure that your debt counsellor follows up with the bureaus for timely updating of records.

Timeframe for Credit Record Update

The time it takes for credit bureaus to update your records can vary. Generally, it could take a few weeks to a couple of months. This duration depends on the efficiency of the credit bureaus and the debt counsellor's promptness in submitting your certificate.

Rebuilding Your Credit Score

Post clearance, your focus should shift to rebuilding your credit score. You can start by engaging in healthy credit habits, such as timely payment of bills, maintaining low credit utilisation ratios, and avoiding unnecessary debts.

Monitoring Credit Report

It's advisable to regularly check your credit report post-debt review to ensure that all information is updated correctly. If there are discrepancies, you should contact your debt counsellor or the credit bureaus to rectify them.

Choose DebtBusters to Clear Your Debt Today

Embarking on a journey to financial freedom starts with making informed choices. When it comes to navigating the complex waters of debt clearance, selecting the right partner is crucial. DebtBusters stands out as a beacon of hope and efficiency in this process. 

Get in touch today.