Businesses are opening again with staff returning to work. However, several factors are affecting people’s ability to afford debt instalments. These include:
- Lower salaries due to a business being unable to afford post-lockdown salaries
- Reduced working hours to maintain COVID-19 regulation requirements in the workplace
- Retrenchment of one of the salary earners in a household
- Use of credit in order to survive during the period of “no work, no pay”
During pre-COVID-19 around 50% of credit users were already over-indebted and unable to pay all their monthly debts and cover daily living expenses. That was while they were able to earn a full salary each month. Addicted to using credit, people have slowly been digging a hole for themselves.
If you earn an income, debt review offers a solution to combating over-indebtedness. It is a legal process to solve over-indebtedness in the cheapest and most effective way. Debt review may only be provided by debt counsellors registered with the National Credit Regulator (NCR). Being in debt is not a crime – it is one of life’s obstacles that can be overcome with the assistance of a debt counsellor.
A debt counsellor will negotiate lower instalments together with lower interest rates and the waiving of costs such as service fees, all to reduce expenditure. The instalment required for debt review will differ from individual to individual, with your income, living expenses and personal situation determining how much your instalment will be. The instalments negotiated could be as much as 30-60% less than your original instalments. If you are married in community of property, both you and your spouse will have to apply together.
A court order is granted which prescribes the required payment towards your credit agreements in terms of the rearrangement proposal entered into by the debt counsellor on your behalf. This does not prevent you from paying more if your financial situation improves. It means that you can pay off your debt earlier than stipulated by your court order and exit debt review when all your debts have been settled except for you mortgage, should you have one. The debt counsellor then issues a Clearance Certificate giving you a clear credit record again; if needed, you will be able to access credit again.
So, if you find yourself in a similar scenario, consider using debt review as a means to overcome your debt stress.