Whether you are in debt review or not, life can be tricky and challenges will come your way.
Unforeseen economic challenges, like those brought about by Covid-19, can cause you to worry about being able to make your court-ordered debt review repayment. Your landlord may decide it is time to sell the place you are renting, or your mobile phone may be stolen. All these things will impact on your day to day life and could hinder your ability to communicate with your Debt Counsellor, PDA or credit providers. They may also force you to make changes that will impact your debt review.
Many people in debt review will just go ahead and make some changes, and then only months later, speak to their Debt Counsellor about it. By this time, all the progress that has been made with their debt review could be threatened. It could end the entire debt review if left unchecked, it may in fact, already be too late.
A large number of issues in debt review can be mitigated by speaking to your Debt Counsellor sooner rather than later.
Let’s look at a few of these issues and consider how speaking to your Debt Counsellor as soon as the situation comes up, the most beneficial course of action.
TROUBLE MAKING A PAYMENT
If you have been put on short time then this will directly affect your income. Receiving less income could result in your prioritising daily expenses over monthly debt repayments. You need to put food on the table and buy electricity to get by. Many consumers who have such an unplanned drop in income, do not speak to their Debt Counsellor when they first see trouble coming. Instead, they make a decision based on their perceived needs at the time. Often this results in them not having the needed monthly debt repayment amount to their credit providers (via their Payment Distribution Agent). Some though, wisely decide to pay what they can, but others foolishly just skip the entire payment.
If a few days go by and none of their creditors complains, they may foolishly think everything is ok and as if nothing is wrong. This is naive and unrealistic. It is obvious that the credit providers’ computers will pick up the missed payment, and will start the process of them trying to get out of the debt review. Although consumers will have been warned about the serious results of missing payments, they simply hope for the best.
What happens next… the credit provider’s computers generate a letter saying they are getting out of the debt review because the consumer did not stick to the agreement and court order and will revert to pestering calls, SMS’ and eventually a summons. The consumers stress levels will start to rise, and they will invariably go running to their Debt Counsellor, to ask for assistance long after the fact. They may now face legal action, judgments (which last for 30 years) and the repossession and sale of their assets like their car and home.
A SUDDEN EXPENSE
An unplanned expense can also necessitate consumers to spend money that they had set aside for debt review payments. When your car breaks down or your geyser explodes or perhaps your washing machine breaks down you may decide that you need to take immediate action to fix the problem. This can result in not having the needed funds to make your regular monthly debt restructuring payment.
Missed payments can lead to credit providers leaving the debt review process and starting new legal action against the consumer. This will increase the consumer’s stress and could end their debt review journey. In many cases this results in the consumer owing more money than they thought, as the benefits of debt review are stripped from the accounts they have been paying and huge fees and interest are once again included by the credit providers. Next, the collection agent calls and legal action begins with summonses and more.
In some cases, the car repairs that were paid for with the debt review instalment ends up being repossessed and sold off on auction, leaving the consumer without a vehicle for the next few years.
A CHANGE IN CONTACT INFO
It is not uncommon for people in South Africa to regularly change contact info. This includes their physical address, their mobile number and their email address. Maybe their phone gets lost or damaged and they simply get a new sim card and number. Perhaps they decide to move or they change jobs, and thus email addresses. This is not unusual and normally they let their friends and family know about the changes.
What may present a challenge for people under debt review is when they move, and the credit providers send important legal documents to their old address. Because they are not aware of the legal document, it can escalate to the point where a credit provider goes to court and the consumer is not there to defend themselves. Next, they could be surprised with a judgment and a huge bill from the credit provider’s attorneys.
Other consumers complain that they are no longer getting regular distribution updates from their Payment Distribution Agent. It could be that the emails are going to their old email address or the notification SMS’ has gone to their old mobile number. It might even be unaware that their Debt Counsellor is desperately trying to reach them with important information, but you have not updated your contact details with them.
If you see problems brewing due to a possible future change in income, your Debt Counsellor can reach out to your credit providers in advance and warn them. This may prevent them from trying to get out of the debt review. It might not prevent all of them from leaving and starting to send new lawyers after you but it might keep most of them in the process. It could happen that the credit providers are understanding, and give you a month’s breathing room or allow you to make a reduced payment for that month. This could only happen if they are notified well in advance and if the Debt Counsellor has enough time to try reach out to them.
Speak to your Debt Counsellor as soon as you think there might be a change with your income.
If you have a sudden unexpected expense and have not been saving a little as per your budget with the Debt Counsellor, you might make a rushed decision to spend money that should go towards repaying your debt. After all, you need clean clothes, you need to have a shower and you need to be able to get to work.
A short conversation with your Debt Counsellor, however, may help you figure out how much it will cost to use a laundromat this month, while you save towards a new washing machine. They may help you realise that your friend has a washing machine, or your relatives do, which you could use without spending more now. You may be able to get a lift to work with a colleague or use public transport for a few weeks, while the Debt Counsellor speaks to the vehicle finance credit provider about making a reduced payment for a little while, to help cover the repair costs. You will never know unless you speak to your Debt Counsellor.
Speak to your Debt Counsellor if you face a sudden unplanned expense.
NEW CONTACT INFO
Rather than miss out on the chance to defend yourself legally (if your credit providers send letters to your old address) and rather than miss out on important emails and SMS’, it is essential to update your Debt Counsellor if/when your contact info changes. They will advise you on who else to inform about your change of address. They will remind you
to let the credit providers know about the change. They may remind you to update your insurance provider or Payment Distribution Agent about the change so that you don’t have experience problems later.
Speak to your Debt Counsellor if your Contact info changes.
SPEAK TO YOUR DEBT COUNSELLOR SOONER RATHER THAN LATER
By simply reaching out to your debt counsellor (the person who you are paying to help you each month) you can avoid some of the biggest challenges that could arise in debt review. By keeping them in the loop, you can have the entire Debt Counselling team at their office, working on your case.
While the Debt Counsellor is not able to just wave their wand and make the problems disappear, they can bring years of experience and good decision making to the table and help you see what all your options are. They can provide you with sound advice on how to protect your assets and stay in the debt review process, even when the unexpected comes
The sooner you reach out to them, the more time you give them to help you find the best solution for your challenging situation.