When you fall into arrears on an account and receive a repossession order, you stand to lose more than your assets: your credit record and your credit score, may be negatively affected.
A repo order will sit on the credit report for some time, preventing you from accessing future loans from credit providers. It is why it’s best to stop repo orders and avoid incurring a negative credit score.
The good news is that you can still get a repossession order removed from the credit report and restore your account if you were unsuccessful in blocking the repossession order in the first place. Below are your options.
Dispute the repossession
Of course, you have the option of lodging a dispute with the credit bureau to remove the negative record – the repossession order – on the grounds of inaccuracies regarding the account balance, payment terms or other information received from the lender etc.
The credit bureau is entitled to verify this information within a month. If the information is wrong, it will remove the repossession listing.
Settle your debt in full
Every time legal action is taken against your account, you stand to collect negative information on your credit report.
Court judgments such as repossession orders remain on your credit record for five years, longer than other potential negative info, e.g. enforcement action by creditors (sending letters of final demands) or frequent credit enquiries about applying for credit.
A repo order is essentially a court judgement where you are instructed to pay the outstanding debt amount or face asset repossession. Therefore, settling this debt as soon as possible is critical, even after the asset is taken from you. Theoretically, you still owe money to the lender even after you’ve lost the goods via repossession.
Paying off the debts listed on your credit report on time helps prevent any negative impact on your credit report, thus improving your credit score.
Settling the total debt amount incurred within the five years the repossession order is said to reflect on your account will also remove the judgement against you from the credit report.
Note that you will have to pay more than the original debt amount, which may prove challenging. The debt payments to creditors will now include the initial outstanding debt and any other costs incurred since receiving the repo order, such as recurring legal costs and added interest.
To finally remove the repo order from your account, the credit bureau must receive proof of full payment from the credit provider or a valid court order rescinding the original court judgement.
That’s why it’s essential to check the credit reports to ensure that the negative info is no longer on record once you’ve made the outstanding payment. If the negative record is still there, you should immediately lodge a dispute with the credit bureau to have it removed. By law, the bureau should investigate within twenty days from receiving the complaint.
Negotiate new payments with creditors
To settle your debt, as discussed above, it may be necessary to negotiate a new payment plan with the creditors, especially if you cannot commit to repay the loan outright.
If you are struggling with massive debt, it is advisable to reach such a settlement with the creditors to be able to afford the repayments and clear the debt. For example, you may agree on lower instalments at a lower interest rate. You could also ask for paying the loan’s balance in exchange for getting the negative mark off your credit report.
This is not an easy process to undertake and may involve seeking professional assistance to conduct the negotiations with creditors and ensure that the concluding payments will erase any negative impact on your credit score. It may involve seeking a debt review process first to guarantee your repayment ability.
Consulting a debt counsellor or ezDebt adviser will help with any arrangements to review and repay your debt at an affordable rate, thus improving your credit report and writing off the negative history of your payment behaviour.
Our professional ezDebt advisers can help you stay on track with debt repayments and stop repossession orders. All our debt counsellors are registered with the National Credit Regulator (NCR). Get in touch at www.ezdebt.co.za.