Let go of your debt in debt review
The fact that South Africa is declared as the country that is most over-indebted in the world has a direct impact on work life and social development. We are the country with the largest increase of unsecured debt, with most expensive credit life insurance and service fees in the world. On average about 89% of monthly Nett salary earned by the middle-income group is paid towards servicing debt.
The increase of pay-day loans is of major concern, and on average one household have opted 7-8 times a year for such a loan which can vary to over 50% of Nett income. It leaves the consumer with no other alternative but to apply for another pay-day loan just to service the debt obligations. Another problem that is affecting over-indebted consumers are the large amounts of vehicle owners pawning their cars for cash, not understanding the implication of such a loan and the risk of losing that asset. This again shows the desperateness of the consumer to pay debt and put food on the table.
Furthermore a 12% of performing home loans are in arrears, as much as 44% vehicle finance is in arrears, forcing consumers with a R20000,00 monthly Nett income stay in the habit of pay-day loans to service the home loan and vehicle payments every month. It is a bubble waiting to explode as pay-day loans nationally have increased by over 24%. It shows the economy’s effect on employees and the strain on the salary earners’ take home pay that is on a real decline spiral due to the inevitable increase in living costs. We need to bear in mind that the average annual salary increases are 3-6%. How does one cover the shortfalls when medical aid premiums increase for instance by 9-18%? It is a real problem that the take home pay of the already vulnerable consumers that are most likely over-indebted as well will decline further.
One must understand that good debt is declining. Less people are lending money to build a business; bad debt is on the increase due to social pressure; and cultural transfer of debt is the reason for a high debt entrapment rate in South Africa’s employment market.
The impact of unplanned credit is robbing the consumer from saving toward much needed retirement, rather than investing now, for when you can no longer work and sustain an income. Most consumers’ disposable income is all channelled to pay debt and service pay-day loans month to month. The increase of consumers that do not qualify for further credit is a scary statistic, and they are struggling so badly to keep head above water that it spills over in low morale and depression due to a serious rise in declining take-home pay which is growing into a negative pay.
Most consumers are afraid of their credit records being negatively affected when entering the debt review program. The main reason is because consumers do not have the knowledge of debt review and how it can benefit them in the long run. For this reason, so many consumers enter debt review when it is too late, in other words legal action has commenced.
Debt review means it is the creditor who is the party accommodating the consumer who no longer can pay the contractual credit agreement. By doing a debt review application the consumer’s ITC is protected from creditors who will blacklist defaults on accounts that are not under debt review.
Debt review is the saving grace for over a million consumers.
We at CDS do Free credit reports for consumers who are over-indebted.