A debt review clearance certificate, or Form 19, is a legal document issued by a debt counsellor to verify that a consumer has completed debt review. That means that they have fulfilled all their obligations under every credit agreement included in a debt review court order or a debt review repayment agreement.
What does a Debt Review Clearance Certificate Signify?
1. Completion of Debt Review
A debt review clearance certificate signifies the end of a successful debt review process. It confirms that the consumer has satisfied all the repayment obligations under the restructured payment plan formed during the debt review process. Issuing of a debt review clearance certificate signals. The effect is that even if the consumer has a long-term agreement subject to debt review, for example, a mortgage bond, they can obtain a clearance certificate after every other short-term credit agreement under debt review is paid in full. The National Credit Act (NCA) 34 of 2005 indicates that the debt counsellor, and not the courts, must issue a clearance certificate.
2. Restoration of Creditworthiness
The completion of the debt review signifies that creditworthiness is restored. The individual can regain access to credit facilities as their credit profile is no longer flagged as under debt review. The successful completion of the debt review positively influences the credit score over time.
How does one obtain a Debt Review Clearance Certificate?
The debt review removal process is the steps the debt counsellor follows to remove the debt review flag on a consumer’s profile. To remove a person from debt review, the debt counsellor undertakes the following steps:
- Pull Up Your Credit Report: We begin by retrieving your credit report to get a comprehensive view of your current credit status and obligations.
- Obtain Paid-up Letters from Credit Providers: We seek confirmation from your credit providers that your debts have been settled. This confirmation comes in the form of paid-up or prescribed letters. If you already have these letters, please forward them to us.
- Updating your records in the NCR Debt Help System: We update your status on the National Credit Regulator (NCR) Debt Help System (DHS) to reflect a so-called "F2 status", which indicates that you have settled your debts. Read more about the DHS.
- Generation of Form 19: Next, we generate your debt review clearance certificate (Form 19), the document required for the removal process that details the settlement of your debts.
- Forward Form 19 to all your Credit Providers: We send your Form 19 to all your credit providers to inform them of your updated status and the settlement of your debts.
- Certification of Form 19: Once Form 19 is completed and distributed, we ensure it is certified to confirm its authenticity.
- Updating your Records with Credit Bureaus: Finally, we send the certified Form 19 and the paid-up letters to all relevant credit bureaus (e.g. Experian, TransUnion, and XDS). This ensures that your credit records are updated to reflect the clearance of your debts.
These steps ensure that your debt review status is accurately removed and your credit profile is updated.
How much does it Cost to be Removed from Debt Review in South Africa?
The National Credit Regulator (NCR) prescribes debt review fees. However, the NCR regulations are silent concerning debt review removal fees. That is why debt review clearance certificate fees vary from one debt counsellor to another. At Debt Sage, we charge R1450 to issue a debt review clearance certificate. Need a clearance certificate? Contact us.
When can a Consumer get a Debt Review Clearance Certificate?
A consumer under debt review can only be issued with a clearance certificate when:
- They have paid up all their debts listed in the debt review court order or in the debt review repayment agreement;
- They have paid up all of their short-term credit agreements that are listed in the debt review court order or debt review repayment agreement. Short-term credit agreements may include vehicle financing, credit card debt, and personal loan agreements. In this case, the consumer is only left with a mortgage loan, not in arrears, as per the debt review court order or debt review repayment agreement.
Credit providers must issue paid-up letters before a debt counsellor can issue a clearance certificate, to ensure that the debt has been repaid in full. Once the clearance certificate is issued, this must be forwarded to all the credit bureaus with the paid-up letters. The debt counsellor and credit bureaus must update their systems to show that the consumer has completed the debt review process.
What are the Elements of a Debt Review Clearance Certificate?
A clearance certificate has the following elements:
- Consumer Details: The clearance certificate will include the (i) full legal name of the consumer, as well as (ii) their identification number, e.g. national South African ID or passport number.
- Debt Counsellor's Details: The clearance certificate will include (i) the full name of the debt counsellor responsible for managing the consumer’s debt review process, (ii) the official registration number of the debt counsellor as issued by the National Credit Regulator (NCR), and the debt counsellor’s contact details, including phone number, email address, and office address.
- Credit Provider Details: (i) All the creditors involved in the consumer's debt review process, (ii) specific details of the accounts held with each credit provider, including account numbers and the type of debt, and (iii) contact details for each credit provider, such as phone numbers and email addresses.
- Statement of Completion: The clearance certificate will include (i) a confirmation of fulfilment, a formal statement confirming that the consumer has met all the obligations under the restructured debt repayment plan, (ii) the date of completion, i.e. the date when the consumer completed the debt repayment, and (iii) certification: an official certification by the debt counsellor that all conditions for the debt review clearance have been satisfied.
Who Informs the Credit Bureaus when you Exit Debt Review?
After issuing the debt review clearance certificate, the debt counsellor communicates with credit bureaus and creditors. Upon issuance, the debt counsellor notifies the credit bureaus, ensuring that the debt review status is updated in their records. This update is crucial for improving the consumer's credit profile.
How long does it take to Remove the Debt Review Flag From the Credit Bureaus?
Once your accounts are paid off and we have issued the clearance certificate, we send the certified Form 19 with paid-up letters to all relevant credit bureaus. The time it takes for the debt review flag to be lifted depends on how quickly the credit bureaus update their records, but it is generally completed within 21 days.
Final Thoughts
Maintaining communication with the debt counsellor and credit bureaus is crucial to ensure the credit profile is accurately updated after receiving the clearance certificate. Having financial advice during this phase can also be beneficial to navigate any complexities or issues that may arise during the transition out of debt review. Contact Debt Sage, the debt counselling today. We can help to issue a clearance certificate if all your accounts under debt review have been paid up so that you can enter into new credit agreements.