28 November 2012
South African creditors are taking approximately 70 000 consumers to court every month for defaulting on their payments.
DebtBusters MD and registered debt counsellor Luke Hirst explains why it is vital that you seek help as soon as you begin to fall into arrears with any of your debt repayments.
What’s the worst that can happen?
With rates constantly on the rise, more and more South Africans are falling into arrears with their debt repayments. As a debt counsellor I see daily cases of South Africans who are so far down the debt path that it remains impossible for them to get out of debt without selling off their most prized possessions – their homes or their cars.
For anyone, the thought of selling a family home to pay off debts is a nightmare, especially when you consider that, under the current housing market; you are likely to get far less money for your home than it is worth. Not only are you getting rid of the one asset that is worth keeping, but because you are being forced to sell now, you are getting a poor price.
What can you do to avoid this?
Most of these individuals would have been able to avoid selling off their assets if they had applied for debt review sooner. By going under the debt review process at an earlier stage, people would be able to get out of debt more quickly and avoid having to sell off their assets. If you are over indebted and wait too long to find out, it could cost you your home.
When you are beginning to feel the squeeze of having to pay off more than you earn, do not go out to look for somewhere to borrow money from. Not only will this do nothing to help the problem but you will actually be placing yourself into even further trouble and risking turning a sticky situation into a very ugly one.
What can a debt counsellor do for me?
If you are genuinely over-indebted, meaning that your expenses (living and debt servicing) are higher than your income, you can apply for debt review to help you manage your repayments more easily. A government approved, registered debt counsellor will look over your income and expenses and suggest ways in which you could be saving money. On top of that, he/she will contact your creditors on your behalf and negotiate a better repayment plan on your debts. This means that you will be paying less money per month to service your debt, as well as allowing you enough money every month to buy essentials like food, utilities and transport.
While you will have to cut out the luxuries, the advantage of keeping your family home in the long run will be far more beneficial.
Another great benefit of the debt counselling process is that, unlike administration, it will give you a genuine chance of getting credit later in life. While administration means you have a black mark against your name for five years (after the debt is paid off) before people will lend you money again, debt management simply puts a flag up against your name for the duration of the debt counselling process.
When all your debts are repaid, the black mark is taken off your name and you are free to go out and get further credit.
Remember, the best time to get out of debt is today, so call us on 0861 663 328 (0861 NO DEBT) or visit www.debtbusters.co.za and get your financial life back on track.