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Don’t ignore spiralling debt – visit a counsellor

Published Apr 6, 2022

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RANDS AND SENSE

By John Manyike

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It's never easy to admit it when financial matters go wrong. Rather than face the prospect of mopping up a messy financial situation, many of us bury our heads in the sand and hope that the problem will go away. The good news is that it is never too late to act, and you can recover.

While a positive financial future may seem far away, it may not be if you take the necessary steps you need to empower yourself with knowledge about available financial tools. Enabling a new, positive future begins with taking the first step and meeting with a debt counsellor.

The debt review process is about protecting your assets by having a specialist arrange a structured and affordable repayment plan for your debt, says Waldo Prinsloo, head of risk and compliance at Octogen Debt Review.

Debt counselling can help you to achieve three important goals. These are:

  • To make sure that you can feed your family,
  • To keep a roof over your family's head, and
  • That you have transport.

These three goals will help you to balance what you need to repay with what you need to survive on.

What needs to be understood about the debt review process is that:

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  • Debt review is a legal process that cannot be exited until all debt is paid.
  • If a judgement for payment has already been issued against you, this cannot be included in the debt review process.
  • If you receive notification that legal action is to be taken against you, you have ten days to approach a counsellor to avoid this happening.
  • Overdraft accounts are not reflected on credit bureau debt lists. You need to discuss this with your counsellor to include the overdraft in your repayment schedule. A lower interest rate and repayment amount can then be negotiated on your behalf.
  • The time spent in debt review depends on how much money you owe and how long it will take to pay off. Once all the unsecured debt, including your vehicle, has been settled, you can exit the debt review process.
  • Once all the debt has been settled, you will be issued with a clearance certificate, and you will have a new credit record so that you can borrow again.
  • Even though you are under debt review, your counsellor must ensure that insurance is paid on cars and other assets.

Approaching a debt review company does not guarantee that you will be helped. If it is found that your debt levels are beyond your capacity to pay them, then declaring bankruptcy and being sequestrated may be the only solution.

You may even find that the counsellor suggests a payment plan that can help you out of your difficulties without you having to go into debt review. What is most important, however, is that you select a debt review consultant carefully and review their credentials so that you get the best service possible.

Having to acknowledge that you need specialised help to get back on financial track should be seen as a growth process, It may be a long process, but if you emerge from it with more knowledge about finance and personal financial planning, you will have equipped yourself with an education that enables you to make better financial decisions and build a better future.

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John Manyike is head of financial education at Old Mutual

PERSONAL FINANCE

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Finance

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