WATCH | Blacklisting: Don’t allow your debt to become a monster

No matter how hard your financial situation may be, never default in paying your monthly account to the point that you get a court judgment against your name.

This is a warning from the executive head of DebtBusters, Benay Sager. Sager said that in most cases consumers are at the mercy of the lender when it comes to clearing their name from court.

In SA, consumers can get a bad credit history through a payment default, which lenders inform credit bureaus about monthly for record keeping. Constant payment defaults can lead to lenders issuing summons, which leads to a court order or judgment against the consumer. This means the court will instruct the borrower on conditions and deadlines in which to pay back the debt. This order is recorded by credit bureaus as well and they immediately “blacklist” the consumer, leaving him or her with little prospect of getting credit in the future.

According to the National Credit Regulator, nearly 9.5-million consumers have impaired records, accounting for roughly 47.5% of all credit-active consumers.

While a default can be cleared within a month with the credit bureau once the payment is made, Sager said the same process can be daunting when it comes to court judgments.

“When there is a judgment it’s a bit tricky. It also depends on where the judgment was taken. Some times it can be in a jurisdiction where the consumer doesn’t live. The removal of the consumer’s name in a judgment is normally in the hands of the lender and the process can take months and sometimes years,” said Sager.

Clearance of one’s name in court depends on the lender’s availability and willingness to go to the judge where the order was made and producing evidence showing that the debt has been paid and having the order cancelled.

“My advice to consumers is not to allow your debt to become a court judgment because it will be difficult to clear your name even when you have the money,” said Sager.

He advised consumers to act once they receive a court summons and to attend their court date as their absence my deprive the court the opportunity of hearing both sides of the story.

“It’s so dangerous not to go to court. If you are not present the court does not get to hear your side of the story and its almost guaranteed that judgment will be granted. Go there and have your say, it’s in your best interest,” said Sager.

Standard Bank said in terms of the National Credit Act, credit providers are required to update credit bureaus with accurate account information. Once an account is settled, the consumer’s credit profile should reflect this within a reasonable reporting cycle, typically within a few weeks.

“A court judgment remains in effect for 30 years. Consumers may need to engage the relevant court or legal adviser to rescind or update the judgment record once settlement has been confirmed,” said the bank

How to maintain a clean credit record once all debt has been settled.

Clients should maintain good payment behaviour to avoid adverse credit bureau listing and judgments.

This will typically involve paying accounts on time, limiting unnecessary credit applications, and promptly addressing any discrepancies identified on credit reports. We understand that this is often difficult in challenging financial times and therefore encourage clients to reach out to their credit provider for debt assistance at the earliest signs of financial distress. Source: Standard Bank