Women need to tackle debt head on
As the country is celebrating August as Women’s month, the National Credit Regulator (NCR) wishes to also join millions of South Africans in celebrating this and also wishes to emphasise the rights and obligations with regards to managing one’s finances.
It may give you an emotional boost to splash out on the latest designer handbag, spoil your loved ones with the latest gadgets or swipe your store card to buy a new television, but it’s important to understand the impact of racking up too much credit on your future financial security.
“Learning to deal with debt is one of the most powerful tools you can use to manage your family’s finances,” says Nomsa Motshegare, Chief Operating Officer at the National Credit Regulator.
A sizeable number of households in
When you apply for credit, the NCA gives you rights such as the right to disclosure; information in an official language; to be given documents in plain and understandable language and to confidential treatment. You also have the right to access and challenge information held by credit bureaus and get assistance when you are over-indebted. But you also have obligations – such as paying your debts on time each month. “Indications that you’re over-indebted include using your credit card and overdraft facilities to pay debts and to buy food and other necessities,” explains Motshegare. “Other red flags include missing payments on some accounts in order to pay others and receiving letters and summonses from credit providers or lawyers. If you have judgments granted against you, you need help.” “Before a credit provider can approach a Court for judgment, as a way to enforce debt, the credit provider is required to give you prior written notice (section 129 letter), informing you of the options available to you such as seeking help from a debt counsellor; consumer court; ombud with jurisdiction or bringing your payments up-to-date. Please note that you have 10 business days to exercise these rights”, added Motshegare. Motshegare urged women to always act on a letter of demand – “contact your credit providers and explain your situation, they would rather receive some payment than none at all”. The worst thing you can do is to panic when you are unable to service your debt and to take out a loan to try and pay off your other debts. A debt counsellor can help to provide a good overview of your situation and help you chart a way out of the debt trap. Motshegare explains that under the NCA, consumers are entitled to debt counselling. This involves a debt counsellor helping you to draw up a realistic budget and plan to pay back your debts. The debt counsellor will also negotiate with credit providers for you to pay back your debts over time. She adds that undergoing debt counselling does not mean that you cancel your debt, rather that a debt counsellor will negotiate lower instalments for you if you are found to be over-indebted. Take note too that you will have to pay the debt counsellor for their services and that you will not be able to access any more credit while under debt counselling. Consumers should also remember that if they are under debt counselling, they should not skip any payments, and should prioritise their home loan. “If you do not continue your repayments, you could lose your home or car,” says Motshegare. She also suggests that to protect your assets, you don’t cancel your short term insurance cover. She says most consumers are generally vulnerable when it comes to managing their debt, as they often feel too embarrassed or insecure to ask credit providers to explain terms and conditions clearly. “You should never feel intimidated when applying for credit and always make sure you understand the small print including the cost of credit as credit costs money and it is not cheap.” The NCA prohibits credit providers from giving credit recklessly. When applying for a loan, the credit provider will ask for relevant information to assess whether you are able to pay them back. It is in your interest to be truthful about what you can and can’t afford. “It’s important for us to take charge of our finances and to aim for financial independence. An important part of getting your debt under control is cutting back on unnecessary expenditure, sticking to your budget and setting aside some savings each month”, further added Motshegare. “Taking a positive decision to control your levels of debt today can help you to secure the financial future of your family tomorrow”, concluded Motshegare.
When you apply for credit, the NCA gives you rights such as the right to disclosure; information in an official language; to be given documents in plain and understandable language and to confidential treatment. You also have the right to access and challenge information held by credit bureaus and get assistance when you are over-indebted. But you also have obligations – such as paying your debts on time each month.
“Indications that you’re over-indebted include using your credit card and overdraft facilities to pay debts and to buy food and other necessities,” explains Motshegare. “Other red flags include missing payments on some accounts in order to pay others and receiving letters and summonses from credit providers or lawyers. If you have judgments granted against you, you need help.”
“Before a credit provider can approach a Court for judgment, as a way to enforce debt, the credit provider is required to give you prior written notice (section 129 letter), informing you of the options available to you such as seeking help from a debt counsellor; consumer court; ombud with jurisdiction or bringing your payments up-to-date. Please note that you have 10 business days to exercise these rights”, added Motshegare.
Motshegare urged women to always act on a letter of demand – “contact your credit providers and explain your situation, they would rather receive some payment than none at all”.
The worst thing you can do is to panic when you are unable to service your debt and to take out a loan to try and pay off your other debts. A debt counsellor can help to provide a good overview of your situation and help you chart a way out of the debt trap.
Motshegare explains that under the NCA, consumers are entitled to debt counselling. This involves a debt counsellor helping you to draw up a realistic budget and plan to pay back your debts. The debt counsellor will also negotiate with credit providers for you to pay back your debts over time.
She adds that undergoing debt counselling does not mean that you cancel your debt, rather that a debt counsellor will negotiate lower instalments for you if you are found to be over-indebted. Take note too that you will have to pay the debt counsellor for their services and that you will not be able to access any more credit while under debt counselling.
Consumers should also remember that if they are under debt counselling, they should not skip any payments, and should prioritise their home loan. “If you do not continue your repayments, you could lose your home or car,” says Motshegare. She also suggests that to protect your assets, you don’t cancel your short term insurance cover.
She says most consumers are generally vulnerable when it comes to managing their debt, as they often feel too embarrassed or insecure to ask credit providers to explain terms and conditions clearly. “You should never feel intimidated when applying for credit and always make sure you understand the small print including the cost of credit as credit costs money and it is not cheap.”
The NCA prohibits credit providers from giving credit recklessly. When applying for a loan, the credit provider will ask for relevant information to assess whether you are able to pay them back. It is in your interest to be truthful about what you can and can’t afford.
“It’s important for us to take charge of our finances and to aim for financial independence. An important part of getting your debt under control is cutting back on unnecessary expenditure, sticking to your budget and setting aside some savings each month”, further added Motshegare.
“Taking a positive decision to control your levels of debt today can help you to secure the financial future of your family tomorrow”, concluded Motshegare.
