Debt Counselling
5 Tips To Avoid and Overcome Debt Problems
5 Tips From The NCR To Avoid and Overcome Debt Problems
As at end of December 2010 the number of consumers with impaired records stands at about 8.6 million.
To aid consumers, the National Credit Regulator has offered 5 excellent tips to avoid over indebtedness.
- Always Act On A Letter Of Demand
- Seek Help From A Debt Counsellor
- Never Skip Your Payments
- Prioritise your house loan
- Start saving today
When you receive a letter of demand, don’t ignore it!
Contact your creditors and explain your situation. Remember creditors would rather receive some payments, than none at all.
If you cannot afford your monthly repayments, approach your credit providers and negotiate lower payments.
Debt Counsellors help consumers to manage and restructure their debts.
Act now, do not wait until it is too late!
Continue making payments, even when you are under debt counselling
Pay as much as you can prevent the debt from escalating
If you do not pay, you could lose your house or your car!
Never skip a mortgage payment, even when you are under debt couselling
Pay as much as you can
Be careful – you can lose your house
Save some money every month
When you no longer have debts increase your monthly savings
Do a budget and stick to it!
How To Use Your Bond To Consolidate Your Debt
Use Your Bond To Consolidate Your Debt
If you have been blacklisted by the South African credit bureaus and are unable to get any kind of credit, then perhaps debt consolidation is for you. You can then proceed to contact a debt consolidation company and apply for a secured loan.
Even though you have a mark against your credit rating the consolidation company will provide you with a loan when banks won’t, as long as you use your property as security against it.
What this means is that your home will once again be held as collateral for such a loan. However, the debt consolidation company will then pay up all of your accounts and within six months to a year your credit rating will be perfect again.
Why Put My House on The Line?
If you are in serious debt and have nowhere to turn then debt consolidation is the best thing that you can do for yourself. A secured loan will allow you to get more money for less interest. In the long run, if you consistently pay your one account, it will solve all of your credit and debt problems.
Using your largest fixed asset to consolidate your loans might sound like a risky business, but all in all it’s a wise long term decision and will contribute to your financial health in the future.
Once your consolidation loan is repaid you will finally be debt free. In the meantime your payments will decrease and you can enjoy the peace of mind that comes with efficient finance management. As long as you stick to your monthly payments the chances of losing your property are slim. Be sure to find a reputable debt consolidation and mortgage refinance company to professionally handle your debts.
Most debt review applicants are white individuals
Debt Counselling News:
A survey completed by one of the largest debt counselling companies in South Africa has shown that the majority of debt review applications are being completed by white males.
Of the 10000 applicants surveys by Consumer Assist, almost two thirds were men and a large majority of them were white.
Only about 30% of the men were black, and just over 20% of all males were coloured.
Education is still a major hurdle in getting black south africans to understand the benefits of the debt review process.
Andre Snyman, CEO of Consumer Assist, explained that White people are more likely to seek help to overcome debt problems while, black consumers would often shy away from debt counselling when they discovered they could not incur more debt until their debts were paid.
Why Debt Counselling is a better option than Insolvency
Debt Counselling is a relatively new service introduced to help consumers who are struggling to manage their monthly debt responsibilities. The service helps consumers by restructuring their repayments, and renegotiating the interest rates on the outstanding debts.
The main benefit of approaching a debt counsellor as opposed to declaring yourself insolvent is that your assets are protected from repossession.
By declaring insolvency you are essentially giving your creditors permission to liquidate your assets to reclaim a portion of your outstanding debts.
Also, once you have been declared insolvent and your debts have been written off it may take more than 5 years before you are able to apply for credit again.
With debt counselling, you are able to hold on to your assets and you are given clear credit report as soon as your debt have been paid in full. Meaning you are free to apply for a home loan or car loan, and begin rebuilding your life again.
The only negative of the debt counseling process would be that because your monthly repayments are smaller it is going to take you much longer to pay off your debts, and you may end up paying much more in interest charges, over the full term of the loan.
But, this process does allow you to pay extra every month, thereby shortening the term and lowering the total interest charge.
Insolvency allows you to write off up to 90% of your debt, but you’ll lose your house and cars.
Debt Counseling allows you to keep you home but you’ll have to repay the full loan over a longer period.
Debt Counselling Saves Client Over R1mil
Despite thousands applying for debt counselling every month, many still doubt whether the process is actually helping consumers.
Any doubts about the effectiveness of debt counselling and debt consolidation should be put to rest after reading about this story.
Andre Snyman, managing director of Consumer Assist, explains how one of their clients managed to avoid drowning in debt.
“The man was heavily over-indebted and owed R3 004 985, including his bond. He was paying off R24 400 a month but the interest over the 240 months of the debt was going to amount to R2 783 466 alone. In other words over 20 years, he would pay out R5 788 451” Snyman said.
“The debt counsellor restructured his debt after negotiations with creditors. His monthly payment has dropped to R16 890 a month, which means total interest will come down to R1 544 233 and the debt will be reduced to R2 862 133 – including the debt counselling fees.”
“Simply put, debt counselling helped him remove 92 months off his repayments, eliminate R142 852 debt, reduce monthly payments by R7 600 and the biggest saving will come in the R1 239 243 cut from interest rates – enough to buy a really nice second property. And after this process he will have a clean credit record!”
Read more about Debt Counselling and Debt Consolidation