Each financial situation varies greatly from consumer to consumer, and those facing debt or some other financial strain should thoroughly research the options available to them to find the method that best fits their pocket and their circumstances. Debt restructuring in SA can be a simple way to make debt more manageable, and consumers should fully understand the process that debt restructuring entails.
Debt restructuring is a straightforward process that assists the consumer in paying off their debts in a way that matches their current income level. Inflation and the increase in living expenses can cause a consumer’s income to shift from adequate to inadequate, thus throwing their budget under the buss and them deep into debt.
Thanks to The National Credit Act, as of 2007, consumers have the option of debt restructuring in SA and instead of resorting to bankruptcy and losing their assets, they are in the position to find a means of negotiating with their creditors and reducing debt payment amounts.
A registered debt counsellor will help a consumer restructure their debts by analysing their income, bills and financial position and identifying just how badly indebted they are. Once this has been identified, they will also identify which percentage of the consumer’s income can be channelled toward debt repayment.
One of the key debt restructuring methods is to have the debt counsellor negotiate with creditors to reduce repayment terms in order to fit the restructured budget of the consumer. During this period – which may not exceed more than 60 working days – payment is temporarily put on hold while negotiations and new payment terms are settled.
Another debt restructuring method is debt consolidation: for this method, the consumer takes out a loan and uses it to pay off other debts, thus consolidating all debt payments into one smaller debt repayment on the loan. The benefit of this method is that the consumer is left with only one creditor to pay and, depending on the terms of the loan, the payment can be significantly less than the sum of a myriad of debts.
Debt restructuring in SA is a very important method of debt management that consumers are not making full use of yet. If a consumer sees that they are over-indebted and can no longer handle their monthly debt responsibilities, it may be time for them to consider debt restructuring.