MyMoney Online

How to handle your over indebtedness…

When you have finally succumbed to the fact that you are over your head in debt and cannot cope any further. Here is a way forward which will help to soften the blow.

Step one – Open the envelope

No use deferring the inevitable. Debt costs more in the long run. You need to honestly assess the extent of you indebtedness. If your debt repayments exceed your affordability even after squeezing as much as possible from your current expenses then you are probably over indebted.You shouldn’t be spending more than 30% of your monthly income on debt. The average South African household is averaging 76%.

If you cannot repay the cost of the debt you should find help quickly. The problem won’t go away by itself. You need to take charge and get something going. Sell off property and valuables. Covert what you can into cash and pay off as much of the debt as possible.

Step two – Face your creditors

Contact your creditors and bring your situation to their attention. The lender would probably be better off compromising by extending the debt over a longer period and reducing the repayments. In some instances arrangements can be made to service the interest only for a period. What ever you do do not apply for more credit!

Step three – If you still cannot mange then it’s time to contact a debt counsellor. They are regulated and comply with the regulations of the National Credit Act.

The application process

Here is an outline of the process provided by a Debt Counsellor.

Step 1

You complete an application form and provide details of all your Credit Providers.(Consultations are usually done telephonically and by e-mail, but can also be done in person.)

Step 2

They determine whether you are over-indebted, in other words, do your monthly expenses exceed your monthly income? (You have to be over-indebted to qualify for Debt Review.)

Step 3

If you are over-indebted, they inform all your Credit Providers and the Credit Bureaus that you are under Debt Review. Your Credit Providers will also be requested to provide us with a Certificate of Balance (COB) in respect of your accounts.

(You will immediately start to pay a single provisional reduced monthly installment in respect of all your Credit Providers which will be affordable to you. During the first 60 working days, legal action may not be taken against you in respect of the debts that are under review.)

Step 4

After receiving all the COB’s, they will restructure your payment plan and negotiate with your Credit Providers where necessary. After negotiations with your Credit Providers, your new restructured payment plan will be sent to all your Credit Providers and this payment plan will take effect.

(Your restructured payment plan will reduce your monthly debt repayments to an affordable amount, leaving you with sufficient money for your living expenses.)

Step 5

They will instruct their specialist attorneys to apply at court in order to make your restructured payment plan a court order. You will not have to appear in court yourself, as your Debt Counsellor will be the applicant in the matter.

(The process will now be completed and you must ensure that your monthly payments are made timeously in order to prevent Credit Providers from taking action against you.)

Listen to the audio below for more information

Read more from Paul Roelofse at www.investforlife.co.za


This article first appeared on 702 : How to handle your over indebtedness…


Recommended

by NEWSROOM AI

CapeTalk welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the CapeTalk community a safe and welcoming space for all.

CapeTalk reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

CapeTalk is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
4 tips for safely investing right now when everything is so hectic

4 tips for safely investing right now when everything is so hectic

Bruce Whitfield asks Personal Financial Advisor Warren Ingram for advice on how investors can safely navigate this hectic time.

3 best shares to buy right now (by 27Four)

3 best shares to buy right now (by 27Four)

Investment Analyst Nadir Thokan shares his stock picks of the week on Bruce Whitfield’s The Money Show.

How to retire (or stop working for money) by the age of 40

How to retire (or stop working for money) by the age of 40

Warren Ingram recaps the principles “supersaver” Julia, a young client of his well on her way to financial freedom, is following.

3 hottest shares on the JSE this week (by JM Busha Investment)

3 hottest shares on the JSE this week (by JM Busha Investment)

It’s “Stock Pick Monday” on The Money Show. Bruce Whitfield interviews Joseph Busha, Managing Director at JM Busha Investment.

5 dumbest things people in their 20s do with money

5 dumbest things people in their 20s do with money

Sam Beckbessinger, the author of “Manage Your Money like a F*cking Grownup,” has some tips, so you don’t have to live with regret.

Supersaver Julia is back! Is her (already substantial) nest egg still growing?

Supersaver Julia is back! Is her (already substantial) nest egg still growing?

The Money Show’s Bruce Whitfield interviews Julia and her financial advisor Warren Ingram.

Popular articles
[LISTEN] Cape Town businesswoman targeted in fake invoice scam

[LISTEN] Cape Town businesswoman targeted in fake invoice scam

Jacqui Kaminer says banking officials were unable to investigate the matter further because police failed to open a case for her.

Stealthing: a form of rape, says Dr Tlaleng

Stealthing: a form of rape, says Dr Tlaleng

'Stealthing' is the act of discreetly removing the condom without the knowledge or consent of the other party during sex.

Two young boys go the extra mile to get a sick dog to a vet with just R7

Two young boys go the extra mile to get a sick dog to a vet with just R7

Peter and Jerry gave up their last R7 to get a sick community dog (Lady) to an Animal Welfare shelter for medical attention.

Derelict buildings in Parow earmarked for social housing

Derelict buildings in Parow earmarked for social housing

The affordable rental units will be made available for families with a monthly household income of up to R15 000.

'Almost alcoholics' - the blurred lines between social drinking and alcoholism

'Almost alcoholics' - the blurred lines between social drinking and alcoholism

Sobriety advocate Janet Gourand explains the differences between the social drinker and an almost alcoholic.