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Will Debt Relief help me and what are my options?

Are you struggling with overwhelming debt? Do you feel like you have no options left? Are you stuck and don’t know which way to turn? With South Africa’s current household debt to income ratio at 72%, according to Statistics South Africa (Stats SA), you’re certainly not alone.

South Africa’s middle class is facing a massive debt problem, and the lack of end-of-year bonuses, covid-19 and wage stagnation means that many people are borrowing to pay for necessities such as food and transport.

According to the Debt Counselling Association of South Africa 10 million people in South Africa have bad debt — meaning they have missed three or more monthly repayments, and on average people have eight loans each.

While having debt can be a stressful and confusing time, there are lots of debt relief and debt restructuring options available if you know where to look. From personal budgeting and management plans, to debt consolidation loans and personal sequestration, there are many effective ways to manage your debt and gain back control of your life.

What Is Debt Relief?

Debt relief is the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals. A Debt relief programme is designed to help people get back on their feet as quickly as possible. Depending on the size and type of debt, there are a number of options available to you, with some programs capable of wiping out debt entirely and others helping you to manage it more effectively. While you can do a lot of debt relief work yourself, it’s normally a good idea to enlist the help of the experts. Here at Francois Uys Incorporated Attorneys, we analyse each case on its own merits and come up with a tailored solution that helps you gain financial control.

When do you need it?

There are many signs that you are creating a debt trap for yourself. Has your salary dwindled down to nothing halfway through the month? Do you find yourself putting items on a credit card, as you do not have the cash to pay for them? Do you hold your breath every time you make a card payment, as you are never sure that it will work?

If the answer is yes to these, it may be time to consider seeking assistance to get yourself out the financial nightmare.

What are the benefits?

Debt can put a huge stress on families and relationships, and sometimes if you are only paying off the interest, it can feel like you are trapped. By better managing your debts, it means you can really start to make a difference in terms of getting your life back on track.

Some of the benefits can include feeling financially confident, understanding which debts you want to prioritise, developing a debt management plan and understanding other factors affecting your situation such as health, stability of employment or relationship status.

What are my Options?

South African debt relief options are designed to help you manage your finances better. Each option is different so it’s important that you understand the differences in order to decide the best option for you.

  • Financial counselling

Financial counselling is service that can help you get back on your feet if you are struggling to pay for everyday necessities such as food and transport.

Financial counselling is generally a free and confidential service offered by community organisations, community legal centres and some government agencies. Financial counsellors are skilled professionals. They will listen to your problems and help you with things like:

  • bills or fines you're struggling to pay
  • being harassed by debt collectors
  • water, electricity or phone disconnection
  • being evicted from your house
  • car accidents with no insurance
  • tax debts

Before you contact a Financial counsellor though, do a thorough run-through of your budget to see – realistically - how much you can pay each month towards the debt.

You’ll need to know that figure before you settle on a monthly payment with the debt consolidation company.

And make sure you don’t overestimate how you can afford to pay. Create an estimate that’s a little on the low side to allow for unexpected expenses.

  • Debt Restructuring

Debt Counselling is a formal legal process that provides for a consumer to be declared over indebted and for the Debt Counsellor to negotiate a restructured payment plan and obtain a court order confirming the new repayment plan.

Debt agreements are a formal agreement where your creditors accept a fixed payment plan that you can afford. This process starts with a detailed analysis of your income and financial capabilities, with negotiators able to help you create repayment plans and possibly even lower the outstanding amount of debt you have to pay.

Through a process of Debt consolidation all your debts are rolled into one amount. When you do that, that amount will have a lower interest rate than what you have been paying.

That, in turn, will reduce your monthly payment to one you can easily afford. Sometimes, you may even be able to reduce some of your debts.

  • Personal Sequestration;

Personal Sequestration should be your last resort when it comes to debt relief.

Personal Sequestration takes place when an individual declares themselves insolvent, or bankrupt, because of their debt becoming too great and unmanageable and their liabilities exceed his or her assets.

If you become bankrupt, you are declared legally unable to pay your debts and you will be required to surrender your estate to the High Court under the governance of the Insolvency Act. The consequences of bankruptcy are that you literally start fresh without your previous debt. We do however suggest that you first undergo an in-depth financial analysis.

How we can help?

Unfortunately, unless you win the lottery, there is usually no quick fix to get yourself out of debt. But the important thing is to take steps to change your financial future. With the right advice, it is possible to pick the right debt solution for you and put a sensible plan in place to get your finances back under control again.

We’re here to help! Get in touch with one of our expert debt management consultants for an obligation free chat about your situation. We’re professional, knowledgeable and reliable. Contact us today by filling in the form below, start a web chat with us or call 012 654 9247 / 0614677761 to take back your financial freedom.