What it means being Blacklisted & the Effect on Loan Applications?

If you’ve been blacklisted, it doesn’t automatically prevent you from being able to access a loan. Some lenders do accept blacklisted clients. It’ll just take a little more time on your behalf. You’ll need to shop around a bit more for the lenders that are able to assist you.

Let’s differentiate between the meanings of ‘being blacklisted’.

Arrears

If you’ve fallen behind on your payments, your credit record will reflect this, but no legal action would be taken just yet. You can take comfort in the fact that you can to approach your credit provider and make an arrangement to settle the debt and catch up on your payments. Usually, you will have to pay some sort of administrative fine, but it's worth it.

Default

If your loan repayments have been in arrears for an extended amount of time, you’re defaulting on your loan. Borrowers are in default when they don’t honour their debts, whether their failure is intentional or not, it means that the borrower isn’t meeting the debt obligation. At this stage, legal action would be taken and creditors would start calling. You can still negotiate to pay off the remaining debt and additional charges could be dropped.

Judgement

This is a very serious situation and it is very difficult to reverse. A judgment at a high court cannot be withdrawn or removed unless it was issued in error. This is usually for amounts in excess of R100 000. For lesser amounts, judgments are usually issued by the magistrates’ court and these can be withdrawn if you pay off the debt.

What to do if you’ve been blacklisted.

The best thing you can do if you foresee that you’re going to enter a period of financial strain, causing you to be in arrears, default, or receive a judgement, or if it has already materialised, is to contact your credit provider as soon as possible and to negotiate the settlement terms with them.

By keeping your loan payments up to date, you can ensure that this won’t occur. If you foresee that it has happened to you, be of good cheer as there is a way off the blacklist. It may be well worth it to contact the National Debt Mediation Association of South Africa, a non-profit organisation that can assist you in negotiating with your creditors. Here at Fincheck, we know there’s a way out if one has been blacklisted, best of luck and we trust that this helps!