What is a Debt Review Clearance Certificate?

What is a Debt Review Clearance Certificate?

A Debt Review clearance certificate is issued once you have successfully completed the debt review process. This certificate, also known as a Form 19, indicates that you have settled all debts under the debt review agreement and will be issued by your registered debt counsellor. 

This clearance certificate is crucial in removing the debt review status from your credit profile and enabling you to re-enter the world of credit. 

The Credit Clearance Certificate is essentially a clean slate. This informs the credit bureaus and lenders that you are no longer under debt review and have met all obligations in your repayment plan.

In this blog post, we’ll dive into the ins and outs of debt review clearance certificates, providing you with a clear understanding of the debt counselling process and how to move forward with financial confidence.

Table of Contents

The Benefits of Debt Review

How Do You Obtain a Debt Review Clearance Certificate

Life After Receiving Your Debt Review Clearance Certificate

A Structured way to Settle What you Owe

The Benefits of Debt Review

Debt review, introduced under the National Credit Act (NCA), is specifically designed to help over-indebted consumers manage their financial obligations affordably. 

Here’s a quick breakdown of the benefits debt review offers:

1- Repayment Plans:

Debt review restructures your financial obligations based on what you can afford, giving you one manageable monthly payment.

2- Protection from Creditors:

Once under debt review, your creditors are no longer allowed to contact or harass you. 

3- Consolidated Payment:

Debt review covers multiple debts at once, meaning you don’t have to handle each one separately. All qualifying debts are combined under one payment plan.

4- Asset Protection:

Your essential assets, like your home and car, are protected, so you can continue living without the fear of losing these possessions.

5- Credit Score Preservation:

Debt review is not the same as being blacklisted. While you’re under debt review, you cannot take on new credit, which allows you to focus on paying down your existing dues without accumulating more.

You can read more about the entire Debt Review Process here.

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How Do You Obtain a Debt Review Clearance Certificate

According to Section 71 of the National Credit Act, a clearance certificate (FORM 19) is issued when you have successfully completed the debt review process, and all your financial liabilities have been settled. This includes: 

Settlement of All Short-term Debts:

Any short-term debt included under debt review, such as credit cards, personal loans, and retail accounts, must be fully paid off. The only exception is your bond on your home loan. There can still be an amount owed, as long as your monthly repayments are up to date with no arrears. 

Completion of Debt Counselling Fees:

All fees related to the process must be settled. This includes fees owed and any administrative fees associated with the process. If there’s an outstanding amount, it may delay your clearance certificate being issued.

Verification of Payment Status:

Your debt counsellor verifies with creditors and the credit bureaus that all financial obligations listed under debt review have been resolved. This confirmation step is essential in the clearance process.

Receiving the Clearance Certificate:

Once verified, your debt counsellor will issue your Debt Review Clearance Certificate. They will also notify credit bureaus to update your credit profile, which removes the debt review status from your records and confirms to future lenders that your financial liabilities are settled.

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Life After Receiving Your Debt Review Clearance Certificate

With the clearance certificate in hand, you’re officially debt-free under the debt review process. Many consumers are understandably eager to get back into the credit world after completing debt review, but there are a few things to consider:

1. Taking Small Steps: While you’re free to apply for credit again, start with small, manageable credit products. 
2. Improving Your Credit Score: With careful planning, you can slowly rebuild your credit score. Consistently making payments on time and managing your credit responsibly can help improve your score over time.
3. Budgeting Wisely: It’s easy to become indebted without a solid plan in place. Create a budget that outlines your monthly expenses, savings goals, and any discretionary spending.

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A Structured way to Settle What you Owe

With this clearance certificate, you’re empowered to rebuild your financial profile, re-establish your creditworthiness, and step forward into a future free from the pressures of any financial burdens.

Debt Counselling provides a structured way to settle what you owe. Receiving a clearance certificate is an achievement that reflects your commitment to responsible financial management. 

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