How do you know if you’re Over-Indebted?

Due to the 2020 economic crisis, many South Africans have relied on credit to help them financially. As a result, consumers are struggling to afford all their debt repayments and are falling behind. Late debt repayments could lead to over-indebtedness as creditors continue to charge interest, ultimately increasing the total debt payable. What does it mean to be over-indebted and how do you know if you are over-indebted? 

In short, being over-indebted means that you are unable to afford all your monthly debt repayments and living expenses. 

Signs that you are over-indebted

  • You’ve maxed out your overdraft/credit cards
  • You have fallen behind on more than one debt repayment
  • You have little to no monthly living expenses, after paying your debt obligations
  • You have no extra money to save
  • You’re thinking of or may have already sold assets to help pay off debt
  • You’re making new debt to help pay off existing debt
  • You’re unsure of how much money you owe to whom

If you can relate to any of these points it may not necessarily mean that you are over-indebted. However, it could indicate that you are likely to be struggling financially. 

What does over-indebted mean?

Being over-indebted means that you are unable to meet all your monthly financial obligations. Your income may not be enough to support your living expenses and debt repayments. A lot of over-indebted consumers rely on additional loans and credit to help them make it to the end of the month. 

If you’re currently in a similar position you may be over-indebted. 

What should you do if you are over-indebted? 

If you suspect that you are over-indebted, you should seek financial assistance as soon as possible. Consumers who are struggling financially, especially during an economic downfall, may find it very difficult to get their finances back on track. Debt review is a financial solution aimed at over-indebted consumers.   

The debt review process was introduced in 2007 by the National Credit Act (NCA) to provide a solution to over-indebted consumers. The process is ideal for individuals who are employed and are struggling to make ends meet. 

Once you’re under the debt review process your debt counsellor will: 

  • Provide you with a monthly personalized budget that will keep all your payments on track
  • Offer legal protection against creditors and protect your assets 
  • Pay all your creditors on your behalf so that you only have to make one single reduced monthly payment. 

If you’re unsure whether you are over-indebted, contact us today and we can assess your financial situation. Alternatively, leave your contact details below and we’ll contact you as soon as possible. 

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