There is no reason to avoid debt in order to avoid the debt trap; it just entails keeping your eyes on the prize and knowing when to ask for debt help. In SA debt is a rising problem; however there is always help available for consumers who feel that they need help with their debt. One of the biggest mistakes a consumer can make is to file for extreme debt help remedies and sullying their credit score, when they can still manage the situation on their own. Therefore it is important to know when debt help is needed.
If a consumer finds themself in a position where debt payments are taking away from the money they need to cover essential living expenses, it is time to ask for help. Approaching a debt counsellor is the right place to start as they will be able to advise the consumer on the best help for their debt. They would normally recommend debt review, and this entails the consumer handing over their budget to the counsellor. The counsellor will negotiate with creditors and establish a new payment plan that the consumer can keep up with. However the fact that the consumer is under debt review will be mentioned on the consumer’s credit score.
Consumers often let the situation go beyond the point of debt counselling, and if they find themselves with judgments and attachments to their properties it is time to consider more drastic forms of debt help such as sequestration.
Help with debt can be asked for at any time, but it is important that a consumer know when to ask. The balance between a tough month due to unforeseen expenses and a financial situation that requires help is fine – however consumers should not allow one bad month to ruin their credit future.
Article written by: Andrea van Tonder 04-2013