Credit Amnesty - Clean Slate

New Credit Amnesty Regulation Offers A Clean Slate For Consumers

The newly approved Credit Amnesty regulation created waves when it was announced in 2013. Credit providers were up in arms when it eventually took effect in April 2014, despite protests from some banks, credit lenders and opposition parties, who said the move was politically driven and a ploy by the African National Congress (ANC) to buy votes.

Credit providers also pointed to the fact that it would make credit vetting a lot more difficult, but overly indebted consumers were ecstatic as it would mean a clean slate to begin a new credit history.

Higher Day to Day expenses

Since the announcement and implementation of the Credit Amnesty regulation there have been a few developments that have taken place.

E-tolls have gone live and Gauteng motorists are now incurring a new expense and if not paid, a new debt. Interest rates have gone up resulting in further pressure on the average South Africans’ disposable income. Fuel has increased twice to such an extent that it is predicted we will be paying close onto R16 a litre for petrol soon.

All these factors weigh heavily on our finances and our ability to service debts. This perpetuates a trend among South Africans towards a higher default rate on credit agreements as consumers struggle to make ends meet whilst paying for necessary day to day expenses.

A Fresh Start

But while the Credit Amnesty will offer us a once-off clearing of bad debit data, it will not actually give consumers the option of not repaying their loans.

It has become even more important for consumers to stay on top of their debt obligations as the amnesty would give consumers some relief but will not absolve them from paying their debt.

Some Pitfalls…

There are also pitfalls with regard to the amnesty and future applications for credit. Consumers may end up paying more in interest as financial institutions raise interest rates to counter the increased risk of previous judgments and defaults not reflecting on credit histories. Thus the cost of credit will be increased for all average South Africans.

Free Personal Reports

The need to review your credit status is also becoming more important so that you remain in control of your credit score. Our advice is that you monitor your credit reports from Compuscan, Experian, TransUnion and XDS so as to ensure that your credit history is a true reflection of how you conducted your debt repayments. You are entitled to one free report, every year, from each one of the bureaus.

Bond Are You Paying

Who’s Bond Are You Paying?

We all eventually get to a stage in our life when it’s time to leave the nest. Whether that means building a home, moving into someone else’s or buying your own property, the decision is as exciting as it is nerve-wrecking.

The truth is having a roof over your head is one of the basic needs of any human being. You could be living in one bedroom studio apartment or in a 7 bedroom mansion. The essence of it is whether you are paying rent or you are paying for a bond.

Many South Africans aspire to owning their own home. The fact is that only 60% of the South African public own, or are paying towards owning, their own home.

Purchasing Your Own Home Is Not Easy

As most homeowners know, the road to purchasing their own home was not easy. If searching for the perfect home in the perfect area was not hard enough, obtaining finance for the purchase made it even more stressful. If you decided to build your own home, you had to have at least a 30% deposit as most banks have a policy of only financing 70% of the home to be built.

However, all this is incidental. You would still need to have a good credit score. Few banks will even look at your application if your credit rating is below required standards. Furthermore, banks need to ensure that you can afford the repayments on the bond as per the National Credit Act. So a good credit record and a reasonable disposable income (income remaining after you have paid all your expenses) seems to be the “foundation” for your loan application to be approved.

Re-Building Your Credit Record

Building a good credit record is essential to you being able to purchase a home and this is one of the aspects that is within your power!

You can begin to build a better credit score today, but remember when you plan to run the Comrades Marathon, you do not wake up one day before the event put on your running gear for the first time in 5 years and the next day attempt to run 98 km. You start your training many months in advance.

In the same way you must begin today to ensure that you are ready to purchase your new home in the future.

How To Buy A House Without The Bank

Rainfin

RainFin Offers Loans Without Using A Bank

RainFin is an online website that allows ordinary South Africans to lend money from other South Africans. It’s described as a peer-to-peer lending platform. Put into simpler terms, RainFin offers loans without using a bank.

Peer-to-Peer lending is a new smart way to lend money. It is like banking between friends and relatives, with the difference that you can bank with thousands of people.

The finance and capital does not come from RainFin, it comes from other users who have extra money that they would like to invest.

As a borrower there a number of benefits to using RainFin. Firstly, if you are not able to get money from the banks, maybe you can get it from individual investors. Secondly, because you are not dealing with a traditional bank, you don’t have to accept their high interest rates, you may be able to secure a much lower interest rate on your short term loan.

Take Control Of Your Debt

5 Ways You Can Take Control Of Your Debt

Digging Your Way Out Of, and Take Control Of Your Debt

Over 50 percent of credit active consumers in South Africa are struggling to manage their debt commitments every month. The need for you to be able to take control of your debt is becoming more and more urgent every single month.

Here are five short steps you can take to dig yourself and your family out of that negative spiral today…

5 Steps To Take Control Of Your Debt

1. Track Your Spending

Track Your Spending - Take Control Of Your Debt
Start tracking how you spend your money for a month or two. Once you get into it, its becomes quite easy to do. Every time you spend money, write it down or note it in your cellphone.

2. Develop Your Plan Of Attack

Plan Of Action
You didn’t just wake-up one day and find yourself over indebted, it took some ‘effort’ and choices. So it’s going to take some effort to reduce those expenses. Think about how you are going to tackle this challenge over the next few months. You may decide to start with the smallest accounts first, or you may look to payoff the highest interest bearing accounts first.

3. Debt Consolidation

While debt consolidation can cost your dearly if you let the loan run too long, it can be an excellent way of focusing your debt control in one direction.

4. Revolving Debts

Interest rates can be crippling on credit cards. Some banks will consider offering you a revolving loan at a better, lower interest rate what you can then use to settle those credit cards.

5. The Budget

If you spend money, you need a budget! The problem is that most of us have very little disposable income that we can use to budget with. You need to go back to Step 1 and find out where you can cut back for a short while until you’re able to start managing your finances.

Plus Two Bonus Tips

prescribed debt

Some Debts You Don’t Actually Have Pay – Prescribed Debt

Some Debts You Don’t Actually Have Pay

Did you know that there are some debts that you may have incurred, that you are not legally required to pay anymore!

Do get my wrong, I’m not trying to encourage you to just stop paying your all debts. But there are some debts which you are simply not bound to pay any longer – and you’ll still be within you legal right to do so.

You most probably have not heard about it before, but there is something known as prescribed debt.

What is a prescribed debt?

According to the Prescription Act a debt is prescribed, if:

  • in the past three years, you have not made any payment towards settling a debt
  • acknowledged owing the debt in any way – including over the phone
  • you have not agreed to pay it, or been summonsed in respect of it

You can use this as a defence when asked to pay a prescribed debt.

Prescribed Debt and Debt Collectors

In many cases, the debt has been written off by the initial credit provider, and bought over by debt collectors.

debt-collector-person

Here’s the thing – it is perfectly legal for a debt collector or attorney to demand payment from you for a prescribed debt, and if you cave in to the harassment and pay it, you can’t raise the defence of prescription afterwards.

If you are face with this situation do not admit you opened the account, do not admit that there may have been a small balance owing, do not admit that you did not check whether the account had been fully paid. Rather tell the person or collection agent that you do not owe anything and that they should contact your attorney if they wish to pursue the matter.

Always speak to an attorney before admitting liability of any old debt – could be savings yourself thousands.