HOUSEHOLDS SQUEEZED TO THE MAX
Debt review benefits to your pocket.
This week we talk about struggling financially, battling the wave of increasing living cost that effects all consumers in South Africa. Food has increased with over 11% over the past 12 months, from May we will all be paying more to get to work fuel increase of 60 cents per litre, School fees and University costs increase every year, medical aids increased between 9 – 18 % and salaries went up with average 4-5% July 2016 households under more pressure from January 2017. Who anticipated the DOUBLE JUNK status that will have a further effect on our pockets.
So many people are caught up in debt. WHY? Well we all love to buy stuff, and using credit can be very tricky to the person forgetting they actually have to pay that money back, and forgetting it will cost them more over time to settle that money used on stuff. Applying for credit is very easy and not everybody is honest when applying for credit, this spills over into other problems ending up with too much debt when you find you no longer can manage the monthly payments. Then disaster strikes like with our current economy and push the budget totally over the edge, and the new status of over-indebtedness, then YOU trapped and no matter how you budget you just stuck.
According to the latest stats South Africa has 25 million active credit records, of which 10 million credit records have bad listings of some sort from irregular payments, skipping payments, judgement etc. Consumers do not understand the impact when they pay credit late or skip payments on their outstanding debts which goes continue to spiral into arrears. This debt then spirals out of control and consumers struggling to bring the arrears up to date. Most unsecured credit agreements has a monthly service fee, monthly credit life insurance, monthly interest calculated on the outstanding balance, when this category account goes into arrears the service fees also go into arrears, so does the interest arrears add on to the already arrears outstanding capital amount, which becomes a bigger problem when the account is ignored and no payment arrangements made with the creditor. The account is then handed to a collection attorney who will be adding their fees to the said account in the collection process. Ignoring this leads to further legal action, where the attorney goes to court to obtain a summons on the default debt. Most consumers do not understand the impact of such a summons on the individual, family and personal can be devastating. Once the attorney obtain a judgment the debt will remain on your ITC for 10 years. Keeping this all in mind will hinder you from buying your home or a car, or enable you to pay for your kids further studies etc. Until the debt is fully paid up and the judgment rescinded.
Once the negative debt has been paid up, or the judgment rescinded, you then facing the road all over again having to build up a credit portfolio of how you managed your credit scoring, without a good 730+ credit scoring you will struggle to obtain a home loan or buy a car and so on… Debt Review protects your credit scoring by placing a flag on your ITC record preventing you from getting new loans that you can’t afford as you already over-indebted.
The ideal for any consumer is to opt for a debt review application, it is a legal program, creditors may not hold against you. Instead all creditors love debt review and partake positively in the negotiation process with a registered debt counsellor. The debt counsellor has a statutory mandate to declare the actual financial situation to all creditor that will ensure that all parties understand what is available of income to pay debt prorate. The debt review assessment will declare the full household expenditure that is reasonable which include all other service agreements like retirement, medical aid, students at University or collage expenses, vehicle running expenses etc.
When the debt counsellor completes a proposal after all the information is pulled through to form part of the final assessment that confirms the actual portion of income that will be paid to the creditors, this is all part of the debt counsellors motivation. The Debt Counsellor must have a service agreement with one of the registered PDA’s that will fulfil the obligation and distribute money received from the consumer on a monthly distribution to creditors. The PDA will send the consumer an SMS to notify payment was received and a statement by email to proof money was paid to the creditors. The PDA is regularly monitored by the NCR to ensure they comply with their registration compliance. The NCR is very strict and have de-registered two PDA’s Nationally to date.
Dealing with debt can be very tricky, if it was easy no-one would have any issues repaying debt in time and having enough money to pay your other living costs. Debt causes a lot of stress which causes other illnesses that effect the work place and in some cases can be the reason for job loss due to no longer being able to function at work.
Know your debt situation, and assuming you know how much you owe to your creditors can be dangerous and misleading. It is really very important that you have a good idea what is your spouse’s income, and the portion of the debt which at the end of the day is both your debt when you calculate your total debt exposure, as it is not uncommon for the other spouse to have no idea what is the wife or husbands income and debt exposure. It is a very good habit that you study your statements from creditors every month, know the charges you being billed for and what they are for.
It is very easy to play the name game when your finding yourself or the family in tight financial times. Rather make your debt your enemy number one and investigate your options how to deal with the situation like visiting a registered debt counsellor for advice to assist you with a solution that will benefit the whole family, not for this month only but over the next 48 – 60 months.
Getting out of debt takes much longer than what it took you to get into debt. Having a beginning in mind and taking the steps together today to helping you plan for the end goal is what we do….
Dare to care for EXCELLENCE!
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