Communication and speed of debt management are key to future financial well-being
Credit is a valuable tool that can be used to build a future and meet the needs of the family. Like all valuable services, if it is not looked after and controlled, it can be problematic. If things go wrong, the best thing to do is talk to your credit provider and if they can help them, they will, says Jan Moganwa, CEO of Old Mutual Finance.
The key to solving a money problem is to seek help as early as possible. The sooner a financial institution is informed of a problem, the sooner it can help. According to the Old Mutual Savings and Investment Monitor (OMSIM), 62% of South Africans are cutting back on their spending, and in these difficult times, it is better to consider all the choices available, than to live with the worry of trying to sort through things on its own, says Moganwa.
One of the best ways to get back on track is debt consolidation. “What a lot of people don’t know is that debt consolidation helps keep debt under control and can also save you money,” says Moganwa.
This is due to the fact:
- Instead of having to pay multiple accounts, all the debts are placed in one loan.
- A single interest rate, instead of different interest rates on different debts, will be agreed. Since interest rates have been at their lowest for over 30 years, customers are more likely to get a better rate based on their financial situation. The goal should ideally be to settle your most expensive debts first.
“Debt review is another option available to over-indebted clients if debt consolidation is not a practical option. If you are seriously in debt and have been missing payments for a while, your credit score may already be too low to qualify. a debt consolidation loan. In that case, debt counseling may be your next best option. Debt review is a process by which a debt counselor assesses your debt and sets up a restructured debt repayment plan together with you.
“The debt counselor can go so far as to renegotiate interest rates and repayment terms with your credit providers in order to get some breathing room from debt. Debt review, however, is a process. regulated with advantages and disadvantages that are best discussed with a qualified specialist, ”explains Moganwa.
People who are considering a debt review should know that:
- Only over-indebted people will be eligible.
- It is only for South African citizens.
- Only people with a job can qualify.
- You cannot enter into new credit contracts (you cannot apply for a loan or financing) while reviewing the debt.
- It’s not free.
- Counselors charge for their work and attorney fees must also be paid, as all claims must be brought to a court or tribunal before an order can be made.
- All income and debts must be disclosed to the advisor.
- Information from credit bureaus alerts credit grantors that vendors can no longer approve loans for an affected person.
- Repayment terms are made and accepted if the repayment plan meets the terms of the credit provider.
- A lawyer asks the court to make the payment plan a court order.
- If they are married in community of property, both spouses must submit a joint debt review application, and both will be considered subject to a debt review.
The benefits of being subject to a debt review are:
– Only one amount must be paid to the advisor each month.
– The advisor then ensures that a payment distribution agency makes payments to creditors.
– Collectors and creditors cannot harass you.
– Your assets are protected from repossession by credit providers while you are under a debt review.
“The purpose of each of these actions is to help people regain control of their finances and pay off all their debts. It should be understood that these two events can take years to resolve.
“Communication and an honest approach to problems provide solutions and protect your credit rating – something that helps build a strong future and create a legacy. As with all finances, having a budget can help avoid overspending. Budget well, use credit well, and living can be easier and more rewarding, ”adds Moganwa.
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