Debt is all the same, in the sense that we borrow money now and pay it off later. What sets good debt apart from bad debt are the positive or negative consequences that arise from the particular type of debt that is taken out.
28 November 2012
Are you finding yourself with significant debt with no alternatives to decreasing this burden?
If so you have options. The first step in your financial plan to recovery is to contact a registered Debt counsellor who can negotiate with your creditors to extend the terms of your loan, thus reducing the monthly repayment and relieving cash flow.
Contrary to what you may believe, creditors do not want you defaulting on your payments any more than you do. Therefore most creditors are actually willing to negotiate your terms of payment in order for you to not fall behind on these. This does not mean they are guaranteed to agree to this, but you will not know until you try.
It is essential to be brutally honest with your debt counsellor about what you can reasonably afford to pay each month. Make sure that you contact your counsellor first before you start defaulting on your payments. The counsellor will map out your monthly budget so that you are certain what you can afford and show this to your creditors so that they build confidence in you, and they believe you are sincere about getting your debts repaid.
By agreeing to pay smaller amounts per month over a longer period of time creates a win-win situation for both parties. Your credit record is untainted – should you stick to your budget and make good on your obligations – and your creditors receive what is due to them.
Trying to negotiate with a debt collection agency may be more difficult however. Remember that their job is solely to gather your debt, but this is still possible. There tactics may be more aggressive and it is important to know your rights.
Here are a few guidelines according to the South African Council for Debt Collectors. They may NOT:
• Call you on a Sunday.
• Contact your employer, friends or relatives about your debts.
• Contact you persistently over a very short period of time.
• Threaten your arrest or reputation.