POLOKWANE – The first sign of being in a state of over-indebtedness is when your expenditure exceeds your income and you don’t have the means to pay your debt.
With a high probability for financial distress during the lockdown period for many, we spoke to a local debt counsellor, Linda Swart to find out what the first warning signs are and when one should consult a debt counsellor.
Consider yourself as being overindebted once you cannot pay all of your monthly instalments timeously, and you use cash loans to pay other debt or even a credit card, Swart says.
At this point, one requires a debt counsellor who will regulate a process in which a counsellor will negotiate on your behalf, with all your creditors, to have the term of each credit agreement extended and your instalments reduced.
“Your debt counsellor may also appeal to your creditors to reduce the interest rates on your credit agreements so that you can afford to pay off all your debt as soon as possible,” Swart added.
Another role for a debt counsellor is combining your outstanding instalments into one reduced instalment and getting a court order to protect you against legal action from the people you owe. “This also means that you are not allowed to accumulate debt, or qualify for credit when you are under debt review.”
Swart urges consumers to make informed choices, to be able to manage their finances well in order to avoid being overindebted. “If you think you are financially over-committed, contact your credit provider and request an informal debt review.”
Clients who are unable to meet their financial commitments may apply to a registered debt counsellor for a proposed resolution. A debt counsellor must be registered with the National Credit Regulator before they can offer their assistance.
Swart mentions that the debt review process can take between three to five years, depending on the overall amount you owe.
Debt counselling process:
- Find a registered debt counsellor.
- Give your information to him/her.
- The debt counsellor will then calculate your debt.
- Application and fees.
- Getting listed.
- Negotiating with creditors.
- Reaching an agreement.
