How Do You Know If You Have Too Much Debt?

In the battle against Covid-19, many of us had to rely on personal loans, credit cards and mortgages to help pay the bills. There are currently 27.5 million credit-active consumers, and 10.5 million of those have impaired credit records. Almost 50% of households said that they have still not recovered financially. 

When you’re going through a difficult financial time how are you putting food on the table? Paying school fees? Or paying your rent/mortgage? Taking out a personal loan or using your credit card can make it more bearable. 

However, relying on too much debt can put you in a vulnerable position at a later stage. Some consumers are already seeing the impact of their financial decisions over the past year. 

A recent study showed that 46% of credit-active consumers are more than 3 months behind on their debt repayments. This is a clear sign that many South Africans have too much debt, and some may even be over-indebted. 

 How do you know if you have too much debt and what can you do about it? 

What does it mean if you’re over-indebted?

Being over-indebted means that you are unable to meet all your monthly financial obligations. That means with your current salary, you can’t afford all your monthly household expenses and debt repayments.

When you’re over-indebted it becomes tricky to balance all your monthly expenses. Which payments do you prioritise every month? Do you pay school fees or your credit card debt? These can be difficult decisions to make. And they become even more difficult when you start missing payments and your creditors start harassing you. 

A lot of consumers don’t realise that they’re over-indebted and rely on additional loans and credit to help them make ends meet. 

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

Signs that you are over-indebted

• You’ve maxed out your overdraft/credit cards
• You have fallen behind on more than one debt repayments
• 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 3 or more of the points mentioned above, you may be over-indebted. 

If you’re unsure whether you are over-indebted you can use our online calculator. Our online calculator will help you check your financial status in minutes, for free!

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. If you don’t resolve your financial situation it may become a bigger problem at a later stage. Especially while we’re experiencing an economic downfall.

Debt review is a financial solution that has helped thousands of over-indebted consumers during the pandemic.

The debt review process was introduced by the National Credit Act (NCA) to help prevent consumers from becoming blacklisted. The process is ideal for individuals who are employed and are struggling to make ends meet.

Benefits of debt review: 

• Provide you with a monthly personalised budget that will keep all your payments on track
• Only pay one single reduced monthly payment towards your debt
• Legal protection against your creditors and all your assets are protected from repossession. 

For more information about the debt review process click here.

Get in touch with us today if you are over-indebted and would like to get your finances back on track. Alternatively, you can leave your contact information in the form below and we’ll contact you shortly.