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Can pensioners apply for debt counselling?

24 April 2023

In short - yes, pensioners can apply for debt counselling. But why would we be answering such a seemingly odd question.

Well, there is a common misconception that pensioners cannot be assisted by the debt counselling programme because they are not employed. This is not a fact. Your age is not a determining factor in accessing the help you need.

Remember, debt doesn’t discriminate. You can be over-indebted at a young age or at retirement. It all depends on how you manage your debt. There is a solution for everyone, as long as you can meet specific criteria.

Let’s have a further look into this topic.

Debt issues faced by those nearing retirement

In our most recent Debt Index,we found that the percentage of people who are 45 or older applying for debt counselling has increased from 20% to 27% over the past six years, indicating financial stress is becoming more prevalent in this age category.

Additionally, 9% DebtBusters’ new signups in this quarter were aged 55+.

While these numbers are not worryingly high, they still show that people nearing retirement can and do face debt problems.

What’s more is that retirement means that people no longer have an “income” but they still have potential debt incurring expenses. For instance, you may require medical attention and that may come at a high cost. Paying this amount back will not be as “easy” as it is for those who have steady income.

Another issue for retirees is that they may still have outstanding debts. People also may not have had the ability to save enough for their retirement, and thus are debt stressed post-retirement.

All this could lead to over-indebted retirees feeling stuck. But there is a way out - debt counselling.

How does debt counselling work for pensioners?

To qualify for debt counselling, you must have proof of income and be over-indebted. If you’re a pensioner, you need to provide the debt counsellor with your pension letter as proof that there are funds coming your way at the end of each month.

From there, the debt counselling will be the same as it is for everyone:

  1. The debt counsellor will look at your “income” and your debts and create a new monthly budget based on that.
  2. They will negotiate with your credit providers to secure better repayment terms and lower interest rates.
  3. They will consolidate the new amount you owe into one, lower monthly instalment for you to pay.
  4. You will make this payment monthly, for 60 months or until your debt is fully repaid.
  5. Once all debt is paid off, you will receive a clearance certificate stating that you are no longer over-indebted.

Who decides if you are over-indebted?

The debt counsellor determines whether you are over indebted.

They do this by weighing your debt and expenses against your income. If you are left with little to no money (or are in the negatives) after subtracting your debt and expenses, then you will be declared over-indebted.

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How can debt counselling help you?

Debt counselling has changed peoples lives.

If you sign up for debt counselling, you gain access to many benefits, such as:

  • Lower interest rates.
  • Extended payment periods.
  • Legal protection of your assets.
  • Safety from creditors attempting to contact or harass you.

All this makes it easier for you to concentrate on getting your debts repaid. By simply following the restructured payment plan, you will become debt free and will be on the path to financial freedom.

What does debt counselling cost?

The cost of debt counselling will differ depending on your situation, as your monthly fee is calculated based on the amount of debt you have.

However, there are standard fees that you pay for debt counselling and these are set by the National Credit Regulator.

These fees include: an application fee, a restructuring fee, a rehab fee, and monthly aftercare fees.

How can pensioners save money?

Irrespective of your age, if you see that you’re not coping with your debt, your best course of action is to consult a debt counsellor. Don’t wait for your creditors to issue warnings or take action against you, because then it might be too late and it may not be possible to help you.

You can also take steps to save money, so that you have funds to use in the case of an emergency. For instance:

  • Downsize your living quarters and potentially rent some space to make more money.
  • Seek out bargains and discounts on things you need.
  • Spend less on unnecessary luxuries.
  • Consider public assistance.

How DebtBusters help pensioners become debt free

You’re never too old to turn your life around. DebtBusters has helped many pensioners wipe their slate clean, including Mr Abrahams, a 91-year-old who started his journey to a debt-free life at the age of 88.

Debt counselling gives you an opportunity to enjoy your retirement debt-free.

It’s advisable that you settle all your debts before you retire and spend the remaining years of your life doing the things you enjoy the most.

But if you haven’t been able to do that, chat to us to find out about all the ways our solution can help you.

Our friendly consultants can be reached on telephone 086 999 0606, or by filling in the contact form on our home page for a free call back.

If you are struggling to pay your debt, contact us for assistance!

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