Easy steps to lighten the load of Debt Repayment

It was released today that more consumers are applying for Debt Review, According to IOL Business Report “financial stress and economic difficulties experienced by consumers during the year is evident.”

It is also not limited to a specific age group although the 18-35 old age group is showing a slightly higher rate of distress.”  a higher rate of repossessions of both fixed and movable   property (repossessions of vehicles and home loans is on the increase) and other goods this past year than in previous years.

More than 250 families were losing their homes on a weekly basis due to sales in execution because they fell into arrears with their bond repayments. Most were trying to bring the arrears up to date but lost that battle.

Debt Review is the best option open to you when you are fighting for your assets from being repossessed. Debt Review is a very good process, over 1 million success stories of consumers that have taken the debt restructuring option to secure their home, car and other debts from becoming an even bigger nightmare and the risk of losing everything with the real scary reality of ending up on the street, nowhere to go after losing a home that is auctioned by the Sheriff.

The registered debt counsellor has a duty to inform all creditors of the difficult situation facing a consumer, and  negotiate with all creditors including home loan financier and vehicle financier the consumer is over-indebted, can no longer afford the contractual payments and should  pay less over a longer period, that would help financially to put food on the table and take care of their families with improving the situation over time.

Saving one’s home by placing it in debt review is a much better option than losing your home because of legal action brought on by the fact that the financial situation of the consumer changed and the payments are no longer affordable, the home and car being sold on auction is a reality. This has devastating effects on the families that are left homeless must rent a property that in most cases is to expensive putting further strain on the household.

Consumers all over South Africa is faced with the difficulty of the economy and struggle to survive barely able to afford realistic household expenses and under financial pressure.

It is important to understand what the debt counsellor can do for you.

The DC will refer the restructured home loan and other creditors to the court or NCT, the court will decide whether the term and payment suggested by the DC is a reasonable debt repayment plan every month. The court will then grant the order making the debt restructuring proposal and order. Once this order is granted, the DC will then serve the order to all the creditors included in the order.

It is so important for the consumer to keep a copy of the court order, always keep it ready and handy should the day arise the need to present the order to a sheriff or a creditor, as proof you have the courts consent to pay less on the debt and ensuring your payments kept up to date as per that order, the creditors can’t proceed against you legally.

Debt review consumer must take responsibilities and ensure they receive their monthly statement from the PDA – Payment Distribution Agent who distribute the consumer monthly debt payment plan to creditors.

Statistics show that people with a lower income are more likely to be granted credit recklessly as they’re in a lot more need for cash, and desperate find money to feed their families and pay their creditors. This,  another contributing factor why the consumers fall behind in those credit repayments as they did not afford the loan in the first place.  It remains the creditors responsibility to ensure the consumer can afford the debt repayments on new loans and so on…

People who fall in middle, high class spend a larger portion of their money repaying credit agreements, with evident decreasing disposal income due to increases in living expenses effecting all consumers.

We are living in a society that is governed by making new debt, living on debt and eating on credit. This problem needs to be addressed by the consumers acknowledging the problems that they are finding themselves in and learn new skills to get out of debt.  How to stay out of debt and saving money instead of spending all their disposable money every month on worldly goods. Instead of planning for retirement and living on cash every month it brings personal growth and creates wealth.

South Africa’s consumers debt problems is a ticking time bomb waiting to explode!

With debt review you would not need to lend money from anyone as the debt counsellor will do an assessment that will determine what you can afford to pay on your debt every month. Rather pay less now over a longer period. Save for your RETIREMENT FIRST, put money away every month so that you don’t use that money for anything and keep on saving see your balance grow into a positive that will enable you to pay for your car cash, or have the deposit on your new home when you get out of debt review 48-60 months.

There’s a few key things one can do while repaying debts to ease the stress and make things easier. Here are our top 5 tips

  1. Budgeting is key

As we discussed in our previous Five budgeting tips to help turn your pennies around, we discussed the importance of Budgeting, the biggest part of Debt Repayment is budgeting cover all your monthly expenses. It is so vital to understand your financial ability and your monthly income see where or how it will be possible to cut back on spending. Create a plan and stick to it see which debt you are going to tackle first. Start paying debt off with the highest interest rates first, pay it off little by little until you have paid off all Creditors. If you can’t keep the budget up, you must do research about debt review and seek help from a professional practitioner a registered debt counsellor, what do you have to lose any way?

1. A Registered debt counsellor will explain all of your options, assist you in repaying smaller monthly instalments on your debts. As discussed in a previous blog Healthy debt, Protect yourself, how important it is you make sure you seek advice REMEMBER DEAL ONLY WITH REGISTERED DEBT COUNSELOR.

2. Use your savings as a last resort to pay off debt, DON’T SACRIFICE YOUR RETIREMENT FUNDING TO PAY DEBT. Rather use your income or cash to pay debt, or apply for debt review and keep your investment save.

3. See for ways to earn additional income. This is where you can start to get creative, think of interesting ways to make your income larger, for example bake cakes or cookies and sell them, you can rent out an extra room in the house. Or maybe look for another part-time job to add on to your income as a it can be a more reliable source of income. You can even sell old items for cash that has become white elephants in and around your home and settle debts with that money.

  • Change your Spending habits: For example:
  • If you don’t budget, please start doing so going forward.
  • Do not apply for debt you know you can’t afford right now.
  • Do not carry your debit bank card with you to swipe at shopping outings, rather have cash in your wallet and spend within you means.
  • Pack in lunch for work rather than buying food every day. It is cheaper packing in home from your own kitchen and it is healthier as well.
  • Plan your grocery shopping every month and stock up on foods that is on special and other discounted products. You’re your meals it is a lot of fun to plan a week ahead. This all will save you time and money.

For any more advice or if you have any questions, pop us a message in the contact us section or give us a call and one of our Consultants will gladly assist