How to Measure Over Indebtedness

Do you find yourself waking in the middle of the night, drenched in a cold sweat, worrying that you won’t be able to provide for your family because you have too much debt? Here are a few tips on How to Measure Over Indebtedness.

If you do, then you are suffering from the same condition that most South Africans suffer from… over-indebtedness.

What is Over-indebtedness?

A consumer is over-indebted when he/she is unable to pay all his/her financial obligations timeously, as agreed in a credit agreement. This could be because their financial commitments have changed or because the individual has borrowed and spent more money than they earn.

Borrowing money is easy, but making the repayments can be difficult, particularly if you have over-committed yourself, or worst case scenario your circumstances change. If you find that you can no longer meet your credit repayment, it is important not to ignore the problem, as it will not go away.

Debt problems do not usually occur over night. If you are having trouble meeting your repayments, contact your credit provider and discuss the available options. Sometimes a credit provider will restructure a loan or tailor the remaining repayments to suit your particular situation or circumstances.

Once you have reached an agreement, it is important to ensure that the credit provider puts this in writing.

How to reduce spending so that you are not over indebted?

Cut down or reduce spending on the following luxury items:

• Domestic worker (maybe clean the house yourself)
• Alcohol
• Tobacco/cigarettes
• Entertainment
• Club membership
• DSTV/ Cable TV
• Holiday Clubs
• Gambling

What are the solutions to over-indebtedness?

There are a few options available to over-indebted consumer i.e administration, insolvency and debt counselling.

A consumer can only apply for administration if the outstanding debt is less than R50 000. Insolvency procedures have requirements that favour concurrent creditors, which leaves debt counseling as the primary debt relief remedy for many over-indebted consumers.

An accredited debt counselling company that can assist you with over-indebtedness is National Credit Advisors. Take note of How to Measure Over Indebtedness to take care of your finances to the best of your abilities.