More seeking debt review

HARD-PRESSED South Africans are so worried about losing their homes, they are turning to unsecured debt to service home loan payments. Consumers areR1,66 trillion in debt, according to the NationalCredit Regulator (NCR). The latest data also notes that much of this debt is in the form of mortgages, vehicle repayments, clothing accounts as well as secured and unsecur credit facilities. Although nationally home loan mon performing loans’ are at cyclical lows, DebtBustersCEO Ian Wason believes this is due to about30% of homeowners borrowing short-term unsecured ed debt to keep these artificially high. “For clients with home loans they have borrowed uns cur

Although nationally home loan mon performing loans’ are at cyclical lows, DebtBustersCEO Ian Wason believes this is due to about30% of homeowners borrowing short-term unsecured ed debt to keep these artificially high.

“For clients with home loans they have borrowed unscured debt at increasing costs and interest rates over shorter and shorter terms, in order to keep their vehicle and home loan payments up to date,” he said. “When our clients come to us they have surprisingly good credit scores. This is due to them ‘borrowing from Peter to pay Paul’ and hence keeping their debt repayments to date, but they are borrowing more debt,” Wason said. He cautioned that this financial burden is often passed down from parents to their children.”Draw credit report, draw up a budget and work out if you can live on a budget, payoff your more expensive debt and keep up with your home loan repayments.” Those who cannot make this work should contact their bank and a debt counselor to see what options they have, he said. “If you are worried about making ends meet then contact your bank and a debt counselor, It is always better to inform your bank that you are going to miss a payment prior to missing it. “The more informed you keep them, generally the more they will try and help you find a solution,” said Wason. Neil Roets, CEO ofDebt Rescue, applications for said his firm continues to see applications for debt review where there are home loans involved and where the home loan is frequently in arrears.”This isnot unusualin the case of over-indebted consumers, as the home loan is in most casesthe most expensiv edebt. “Though consumers at tempt to take care of their most expensive asset, it is frequently difficult when there reso many competing payment expectations,” he said. Roetssaidthe most important thing is to keep payments up to date. “In the case of assets, as her credit providers are strict on payment monitas there is an asset involved that can be attached when there are no payments received.The probability of a lossis higher if they delaythe attachment process.” Roets briefly outlined the steps involved in the repossession of a house. * The process of repossession starts when the credit provider advises the defaulting consumer of the intent of legal action through the issuing of aSection 129letter in terms of the National Credit Act. * This letter advises the consumer to rectify the default, alternatively seek help from a debt counsellor, failing whichthe credit provider will formally proceedwith legal action. * If the consumerdoes not heed this warning, the credit provider can then proceedby applying for a summons, and subsequentlya judgment. * Thereafter there will be an application for a warrant, which enables the credit provider to repossess and sell the asset. He strongly advised that consumers seek the help of a debt counsellor as soon as they receive the Section 129 letter, as a debt counselor cannot assist on accounts where legal action has already been initiated, i.e.oncethe summons has been served. Wason said once legal action has started, a consumer will immediately incurring legal costs and handed over the bank’s legal department, which will draw up a sale in execution document and make an application to court to repossess the home. “This is not what the bank wants to do – they are a bank, not a property owning business, so they will try and give you every single option so that they don’t have to repossess your property. “However, if you don’t pay, then this is what they are forced to do.” -Fin24.

Consumers areR1,66 trillion in debt, accordingto the NationalCredit Regulator (NCR). The latest data alsonotes that much of this debt is in the form of mortgages, vehicle repayments, clothing accountsas well as secured and unsecur edcredit facilities. Although nationally home loan mon performing loans’ are at cyclical lows, DebtBustersCEO Ian Wason believes this is due to about30% of homeowners borrowing short-term unsecured ed debt to keep these artificially high. “For clients with home loans they have borrowedunsecur eddebt at increasing costs and interest rates over shorter and shorter terms, in order to keeptheir vehicleand home loan payments up to date,” he said. “When our clientscometo us they have surprisingly good credit scores. This is due to them ‘borrowing from Peter to pay Paul’ and hence keeping their debt repayments to date, but they are borrowing more debt,” Wason said. He cautioned that this financial burden is often passed down from parents to their children.”Draw credit report, draw up a budget and work out if you can live on a budget, payoff your more expensive debt and keep up with your home loan repayments.” Those who cannot make this work should contact their bank and a debt counselor to see what options they have, he said. “If you are worried about making ends meet then contact your bank and a debt counselor, It is always better to inform your bank that you are going to miss a payment prior to missing it. “The more informed you keep them, generally the more they will try and help you find a solution,” said Wason. Neil Roets, CEO ofDebt Rescue, applications for said his firm continues to see applications for debt review where there are home loans involved and where the home loan is frequently in arrears.”This isnot unusualin the case of over-indebted consumers, as the home loan is in most casesthe most expensiv edebt. “Though consumers at tempt to take care of their most expensive asset, it is frequently difficult when there reso many competing payment expectations,” he said. Roetssaidthe most important thing is to keep payments up to date. “In the case of assets, as her credit providers are strict on payment monitas there is an asset involved that can be attached when there are no payments received.The probability of a lossis higher if they delaythe attachment process.” Roets briefly outlined the steps involved in the repossession of a house. * The process of repossession starts when the credit provider advises the defaulting consumer of the intent of legal action through the issuing of aSection 129letter in terms of the National Credit Act. * This letter advises the consumer to rectify the default, alternatively seek help from a debt counsellor, failing whichthe credit provider will formally proceedwith legal action. * If the consumerdoes not heed this warning, the credit provider can then proceedby applying for a summons, and subsequentlya judgment. * Thereafter there will be an application for a warrant, which enables the credit provider to repossess and sell the asset. He strongly advised that consumers seek the help of a debt counsellor as soon as they receive the Section 129 letter, as a debt counselor cannot assist on accounts where legal action has already been initiated, i.e.oncethe summons has been served. Wason said once legal action has started, a consumer will immediately incurring legal costs and handed over the bank’s legal department, which will draw up a sale in execution document and make an application to court to repossess the home. “This is not what the bank wants to do – they are a bank, not a property owning business, so they will try and give you every single option so that they don’t have to repossess your property. “However, if you don’t pay, then this is what they are forced to do.” -Fin24.

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