Breaking the silence struggling to pay debts in a weakening economy.

This week’s blog, we at Consumer Debt Support (CDS) want to talk about what is debt review. We had previous discussions in one of our blogs on this topic. The question is, how would one deal with debt? What is the best solution that would insure a consumer protect a credit record while working on a plan that has good results, but could take a little longer to slowly pay off debt and not incur new debt?

When a consumer finds themselves to be over-indebted the most difficult challenge is how one can change the situation, have enough money for day to day expenses and pay debt at the same time, with the same amount of income? Most consumers do not have enough money to cover their contractual debt obligations, neither have enough cash flow to cover their day to day expenses. There is no extra money at the end of the month to pay that extra cash into one account to get it settled as soon as possible and then tackle the next account and settle it the same way. For most consumers it is only a dream and will never become a reality.

We dream about winning the lotto and how we will spend the lotto, but this is merely a dream and wishful thinking. When you are not able to pay additional cash into a larger unsecured account with a relatively high interest rate, and dream about financial freedom it only causes anxiety and frustration. Being honest to one self that no matter what you do, the situation is just too serious and the over-indebtedness has you locked in debt chains, with no freedom from debt in sight.

So, what is the real solution to many South Africans? If you’re reading this blog and looking for the answers, this article could be just for you.

We know that over-indebtedness equals high debt repayments, eating the bulk of monthly income and making more debt to cover older debt just gets you deeper and deeper into the debt nets. The extent of the problem is that you can no longer get out of it, nor cope to provide food or basic household expenses for the family. This is when payments to creditors are being skipped, you know the saying taking Peter’s money to pay Paul and Paul’s money to pay Tom. This is when the real fear sets in.

This is where you will need the help of CDS to assist you with your debt problem. We are specialists in the field of over-indebtedness, helping our clients to feel the debt relief.  We are registered debt counselors that do the assessments. We don’t use computer programs to kick out the assessment new payment structure. We draw a credit report which helps to assess the possibility of reckless lending. With a lot of care and understanding of the individual’s situation, the one debt payment plan is then calculated and we take into consideration the consumers situation and focus on family needs. We keep the human touch in everything we do to ensure we keep our clients dignified.

When you reach the point knowing you need professional help, it is a big leap to admit there is a problem and get help. The silence of over-indebtedness must be broken. Consumers can talk to us on how CDS can make a difference that benefits not only the individual applicant, but improves the quality of living for the whole family.

Here at CDS we can openly say that South Africans have serious debt problems.

What is debt counselling, debt review or debt restructuring?

We are regulated by the National Credit Regulator (NCR). We have a qualified debt counsellor with a valid debt counsellor certificate. Our office is monitored by the NCR to ensure this office performs as per the National Credit Act (NCA).

The debt counselor’s duties are to assist over-indebted consumers, investigate and report reckless lending. The debt counselor takes into consideration all the criteria of the application to ensure the best and most suitable outcome for the consumer.

  1. The debt counsellor will inform the creditors of the consumers application.
  2. Restructuring debt can result in the debt term be extended until the debt is fully settled.
  3. The debt counsellor can also negotiate for lower interest rates; this all depends on the terms over which the debt solves until fully settled.
  4. The debt counsellor finalises the new payment plan that consolidates the debt into one affordable monthly debt payment.
  5. The payment plan takes into consideration the consumers household expenditure that is essential. The length of the program will be determined by the amount of debt a consumer has, and how best that debt can be restructured that is affordable for the consumer.
  6. The term of a debt review is determined by the debt exposure and the affordability of the consumer. No one consumer’s over-indebtedness payment is the same. They are unique. One consumer can pay their debt over 4 years, and the other 6 years.
  7. The advice we give is that you come talk to us so that we can do an assessment for you based on your personal situation.

Debt Counselling is the preferred and most affordable way for consumers to get out of debt. Entering the program has shown us it adds value to our clients and their personal situations and circumstances. There is nothing worse than not being able to provide for your family while you’re earning an income that’s being devoured by monthly debt payments.

Protect assets in debt counselling:

It would be a disadvantage not to investigate debt review when you know you are struggling to afford the bond or vehicle payments. Protecting the assets from High court default applications becomes a priority when you have enough information.

Don’t ignore the fact that the vehicle is two months or more in arrears. It can cost you your car when you leave it for too long. In most cases consumers’ voluntary surrender is forced when the arrears are no longer affordable and the bank is not willing to accept less than the full arrears payment plus the month’s contractual payment.

What debt accounts can be included into debt review:

  1. Store cards
  2. Personal loans
  3. Home Loans
  4. Vehicle finance
  5. Excess accounts
  6. Overdrafts
  7. Credit cards
  8. Garage cards
  9. Revolving credit
  10. Micro loans

The terms and conditions of a debt review application is the following criteria income:

  1. Stable monthly income.
  2. Salary or wage earners.
  3. Earning basic and commission.
  4. Earning commission and shows stability over 6 months.
  5. Working for yourself, a sole proprietor can apply for debt review.
  6. A natural person can apply for debt review.

Once the assessment has been completed the debt counselor discusses the fees. The fee structures are regulated by the National Credit Regulator (NCR), and strictly monitored. Fees must be disclosed in writing.

Stick to the program:

  1. Stay committed to paying off your debt in debt review.
  2. Do not miss or skip debt review payments. Make payments on time.
  3. The creditor has the right to terminate the debt review when payments are skipped or missed.
  4. Consumers will not have further access to debt after entering the debt review program. (Who wants to take on more debt when you already can’t manage the existing debts?)
  5. Once all the debts have been fully settled debt review can be exited.
  6. When all the smaller debt and vehicle finance has been settled, the home loan can be exited back to the bank’s normal accounts department.

Debt review is not a death sentence, or a life long struggle to pay creditors. There is an expiry date on debt review when the debt will solve and be paid up. Once the program is exited and the debt counsellor issues the clearance certificates or exit letter the credit bureaus will remove all the negative information of the credit report and the consumer is rehabilitated. At this point the credit market can be re-entered.

In conclusion:

Consumers can ignore the problems when struggling to pay debts. Creditors are reacting sooner to collect older debts to prevent the prescriptions of those debts. Debt review is a great program for consumers to pay their debts and become debt free, once the terms of the new payment plan had been paid up in full. You can choose to ignore the problem or you can do something about it. Break the silence of over-indebtedness and get help before it’s too late.