Debt counselling is a formal and highly regulated debt management solution offered to those who are over-indebted to assist them with paying off their outstanding debt, while freeing up cash flow and providing them with legal protection. But is this solution available to you if you are unemployed? While DebtBusters is committed to assisting all […]
31 May 2019
Will you go to jail for not paying your debt? Can your creditors take your car or home? These questions can keep you up at night, adding to the financial stress you already have.
We have the answers to the common debt questions many consumers are afraid to ask.
1. Can you go to jail for not paying your debt?
You cannot be sent to jail for failing to pay your debt, even if you have a judgement against your name.
However, this does not mean avoiding your debt will come without punishment. As terrible as it would be to go to jail, other consequences may be similarly frightening.
Your assets could be liquidated, you could be sequestrated, or you could receive a garnishee order, where your employer will withhold a portion of your income and pay your creditors directly.
2. If a family member dies, am I responsible for their debt?
When a loved one passes away, both their assets and liabilities, such as their debt, are placed in a single estate. Here, their financial situation is assessed.
If their assets can cover their liabilities, this will be taken care of by the executor of the deceased’s estate. For example, their car can be liquidated, and the money can be used to cover their debt.
If your loved one’s liabilities are larger than their assets, their liabilities will be cancelled – in other words, their debt will be scrapped. It will not be turned into a burden you have to carry.
However, if you signed a joint contract with a loved one or you’re married in community of property, you will be liable for the debt. But this will only be applicable to debt accrued during the marriage or in regard to the particular signed contract.
3. Can you lose your home or car because of debt?
Your creditors are allowed to repossess your assets, such as your home and car if you continue to default on your debt.
If you receive a Section 129 Notice or a Letter of Demand, which is a notice that legal action is being taken against you, you may have your possessions taken away from you to settle your debt.
However, this can all be avoided. If you sign up for debt counselling through a trusted provider, they will negotiate reasonable rates with your creditors, and they will no longer be able to repossess your assets.
4. Can it ever be too late for debt counselling?
After being in arears for 20 business days or more, your creditors may serve you with a Section 129 Notice. This signifies your last opportunity to address your debt before legal action is taken against you.
If you ignore the Section 129 Notice, you may become liable for sequestration. Once this stage is reached, it will no longer be possible to apply for debt counselling and you will be taken to court. It’s therefore important to reach out to a trusted debt counsellor within the 10-day grace period after receiving the Section 129 Notice, before any legal action is taken.
At DebtBusters, we can ensure that, your creditors no longer contact you, that you pay less each month while still servicing your debt, and prevent your creditors from ceasing your assets.