Creditors are willing to help and provide solutions but getting out of the debt trap will also require commitment and a change in lifestyle.<\/p>\n
\u201cWhile it is always advised that consumers do not take on debt they cannot afford, the reality is that many people do find themselves in trouble and it is important to know that there are systems and processes to help you out,\u201d said Eunice Sibiya, from FNB.<\/p>
The warning signs that you have taken on too much debt include skipping repayments, borrowing money to pay off debts and using your credit card to fund essential items.<\/p>\n
\u201cThe most important step of the whole process is to acknowledge that there is a problem and to seek help. The sooner you do this the better.\u201d<\/p>
Sibiya suggested approaching your bank or your creditors as a first port of call.<\/p>\n
\u201cUnderstand exactly what debts you have and with which creditor, once you have done this, approach the institutions and ask for help.\u201d<\/p>\n
Creditors and banks encourage customers who are experiencing difficulty with managing their debt to approach them so that debt solutions that fit their needs can be discussed.<\/p>\n
\u201cIt is critical to note that you will have to make some lifestyle changes.<\/p>\n
\u201cJust because you have approached your creditor won\u2019t absolve you of your payment responsibilities.\u201d<\/p>\n
First and foremost set a budget and keep to it.<\/p>\n
You need to cut out on all unnecessary expenditure and items. This may mean looking carefully at money spent on travel, not going out as much and cutting back on entertainment. However, the sooner you start to get on top of your expenses, the better.<\/p>\n
If you still find yourself with unpaid debts there is an option to go under debt review.<\/p>\n
\u201cDebt review should be a last resort, for many indebted consumers it could be the only way out but you should carefully consider the full implications. This includes the processes and ongoing costs of debt review.\u201d<\/p>\n
Debt review was designed for consumers that are highly indebted and unable to rehabilitate on their own or after they have approach their financial institution.<\/p>\n
A debt counsellor will be assigned and is responsible for all your finances. However, it still remains your responsibility to keep tabs on the progress made.<\/p>\n
\u201cUnder debt review consumers are not able to take on any further debt or use credit cards and will need to stick to a very strict repayment process,\u201d said Sibiya.<\/p>\n
You will only be released from the review process once your debt counsellor gives the go ahead, which means you can\u2019t voluntarily remove yourself from the process.<\/p>\n
Debt review is also not free of charge and costs will differ depending on which institution you apply with. Always make sure that you approach a reputable debt counsellor.<\/p>\n
\u201cTry to take back control of your finances by approaching your creditors first and by making lifestyle changes. Debt review should really be the last resort,\u201d added Sibiya.<\/p>\n