Cape Argus E-dition

Drowning in debt? seven warning signs

HAYLEY PARRY Hayley Parry is a money coach and facilitator at 1Life’s Truth About Money

FEELING like your finances are out of control? Here are seven warning signs to look out for and tips to help you manage your debt.

Did you know that last year more than 10 million South Africans either missed a debt payment, paid late or defaulted on a debt due to the impact Covid-19 had on our livelihoods?

More people are seeking help to manage their debts, according to DebtBusters’ latest Debt Index. Recognising you may have too much debt is the first step to taking control of it.

Amelia de Milander, DebtBusters’ marketing manager, and Lee Soobrathi, the head of case management at the Office of the Credit Ombud, have identified seven signs your debt may be unmanageable:

Worrying about debt keeps you awake at night.

You constantly receive SMSes and phone calls requesting payment. Your expenses exceed your income. Your credit score falls because you missed payments.

You are denied credit because you are over-indebted.

You cannot pay a debt, in full or partially when it is due.

You use one credit facility to pay another debt.

Steps to gain control:

Review your budget and cut nonessential expenses.

Speak to your creditors and talk about renegotiating terms.

Ask a debt counsellor for advice. If advised and you qualify, enter debt review (debt counselling).

What are your options? Debt review

Debt review, or debt counselling, is a legal process if you struggle to pay your debts. A debt counsellor will determine what is affordable to pay each month towards debts and negotiate lower monthly payments with creditors. When in debt review, creditors cannot take legal action or harass for payment. Be proactive in managing debt because if creditors have taken legal action, you may not qualify for debt review.

Debt consolidation

This is when all debts are consolidated into one debt. Consolidation doesn’t always mean lower repayments. Always check the details of a loan and do the calculations.

Tips from the experts Check your credit record

“The best starting point for anyone who… is credit active is to register for their free credit report, which gives them insight into their own, unique credit profile and how the credit bureaus in South Africa score them,” says de Milander. You can check your credit record at DebtBusters, Transunion, Experian, or Clear Score.

Don’t ignore your creditors

“The worst reaction is to avoid the collection or request as this can lead to undesirable consequences like legal processes and attachment of goods, which then comes with the added burden of legal costs and further interest,” says Soobrathi. Take creditor’s calls, confirm the details of debts, including how much is owed and the interest rate charged. Enquire about alternative payment arrangements.

MONEY

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2021-10-19T07:00:00.0000000Z

2021-10-19T07:00:00.0000000Z

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