As South Africans fight the daily battle against tough economic times, budgets are being pushed to the limits. Consumers are trying their best to create budgets that work for them and their families. It becomes increasingly difficult to balance debit orders, debt repayments and general living expenses when costs are rising. Home and vehicle owners prioritise their debt repayments as they fear repossession of their assets.
Debts can quickly pile up and it becomes more and more appealing to take out new loans as money dries up. Towards the end of the month, money runs out which forces many consumers to use credit cards or payday loans to fill the void. Often, consumers aren’t able to afford these new repayments and become over-indebted. A consumer becomes over-indebted when their income is unable to cover all living expenses and debt repayments.
When Will My Car Or Home Be Repossessed?
If you default on your vehicle or home loan repayments, the credit provider can initiate legal proceedings. Credit providers will try numerous collection methods and attempts before taking this step. If all else fails, they will resort to try and claim their money back through the repossession and consequent sale of the asset.
Should I Offer To Surrender My Home Or Car?
Do not surrender your assets until you have explore all available options. Unless you are earning no income, there may be other solutions for you besides voluntary surrender to repossession.
If you know you are not able to pay your debt repayments on your car or home, you have an option called voluntary surrender. You will return the asset back to the credit provider who will then sell the assets and use the proceeds to settle the debt owed.
What Can I Do Instead?
If you are struggling to make your car or home repayments, due to too much debt, speak to a debt counsellor. A debt counsellor will assess your financial situation and see how they can help you. If you are over-indebted, you may need debt counselling. The debt counselling process will reduce your current monthly debt repayments to a lower, more affordable amount.
Your debt counsellor negotiates better interest rates and longer terms on your behalf. Not only will you save money, but you will have more money at the end of each month. This is due to your new, lower monthly debt repayment. You also won’t be able to take out any more debt which will assist you to clear up your current debts.