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Credit “amnesty” – Are your debts written off?

creditamnesty“Confusion now hath made his masterpiece” (Shakespeare, Macbeth)

With the introduction of the new National Credit Act “Removal of Adverse Information” Regulations, media reports have created much confusion amongst both debtors and creditors over what the “amnesty” provisions actually mean.

Debtors: Good News, Bad News

The bad news first – debtors hopeful that their debts will be written off or reduced are going to be disappointed.  Whatever you now owe your creditors, you continue to owe – in full.  So don’t stop paying your instalments.

The good news however is that, because the Regulations are aimed at giving you a fresh new chance at obtaining credit (such as bond finance to buy a house perhaps) all credit bureaus must now remove from your credit profile –

  1. Any debt judgment (including a default judgment), but only after you have paid the capital amount due in full,
  2. Any “adverse consumer credit information” as follows –
    • Subjective “adverse classifications of consumer behaviour” such as “delinquent”, “default”, “slow paying”, “absconded” or “not contactable”,
    • “Adverse classifications of enforcement action” such as “handed over for collection or recovery”, “legal action” or “write-off”,
    • Details and results of disputes lodged by you,
    • Adverse credit information represented by marks, symbols, signs etc (used by some bureaus as shorthand for their classifications).

Creditors: Are all credit records expunged?

On the other hand many credit grantors are concerned that they will, faced with a new credit application, be unable to access any credit records relating to the applicant.  Not so – the bulk of the objective information (i.e. the underlying credit information and payment history of a consumer) will remain and only the records and classifications listed above will be removed.  Make sure that you revisit your credit vetting, profiling and scoring systems to take account of these changes.

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