Can you apply for new loans, overdrafts, and store cards while you are on debt review, i.e. can you take out new credit? The answer is no. Let's explore why that's the case.
Why No New Credit?
The goal of debt review is to restructure a consumer's debt to make it more sustainable and to set them on a clear pathway to becoming debt-free. Part of this is to help the consumer rethink their financial habits. Taking on new credit while you are busy with this process would be highly counterproductive and would jeopardise your entire journey towards financial freedom.
Legal Limitations
In terms of section 88(1) of the National Credit Act (NCA) 34 of 2005, a consumer must not incur any further charges under a credit facility whilst under debt review. When a consumer applies for a debt review, they are flagged as 'under debt review' on their credit profiles, which credit providers will see. Credit providers must respect this. Any credit provider who extends credit to a consumer flagged as under debt review is deemed to be engaging in reckless lending.
Venturing beyond the legal boundaries by obtaining additional credit during debt review could catapult individuals into compromising circumstances. It might lead to the termination of the debt review process, casting away the protective mechanisms it provisions.