What are my rights with unpaid debt? I have unpaid debt but don’t I also have rights?

Human rights are rights that everyone should have simply because we are human.

As a human, I have the right to a basic living standard. But what happens when I am drowning in debt and I cannot even afford to live a basic life? Who is looking out for me when I can’t buy food for my family because I need to pay high interest and fee costs? What protects me when my water bill cannot be paid due to debit orders from my bank? What am I supposed to do if I cannot afford to pay my debt and still survive?

These are important questions to ask as it is essential to understand that everyone has rights. It is also important to understand that there are companies out there that assist consumers who are in these situations.

Is the credit market good or bad?

There are significant economic benefits to a credit market that works well. Very often, it helps individuals secure a home for their family or a vehicle to get to work. It can help individuals to accumulate assets and take advantage of economic opportunities. It can help businesses to grow and create new jobs. However, it is an industry that needs to be regulated to ensure that consumers are protected and any negative impact or abuses by credit providers are minimized.

Debt is often a necessity

Consumers would generally not be able to purchase items such as houses or cars if it were not possible to obtain finance. In acquiring such items, it is necessary to be able to spread the payments over a number of months. For a huge number of people the same is true in respect of the purchase of a fridge, bed, radio or television.

It is also true in respect of the cost of a university education and even true for a great many South Africans in respect of the cost of items such as school fees and school uniforms, or the equipment or trading stock for a small business. Credit thus unlocks a diverse range of opportunities, some of which are economic, others educational and yet others simply improvement of ‘standard of living’.

For these reasons, many countries with a similar constitutional order and human rights culture have highly binding legislative and regulatory approaches to consumer credit. The aim is to have a well functioning society where consumers can enjoy the prospects of credit with limited harm.

Because of the need for regulation, credit cannot be seen as a universal basic service to which access should be extended in the same way as access to water, healthcare and electricity. There is a greater need to balance access to credit with protection for consumers, especially the vulnerable.

So what protects the consumers?

Effective debt recovery and enforcement are particularly important. Debt counselling (formally known as debt review) is at the forefront of successful debt management solutions to both consumers and credit providers.

Effective debt recovery procedures would assist credit providers by reducing bad debt write-offs, and assist consumers by ensuring that high bad debts of some consumers do not lead to higher interest rates for the rest.

Who regulates these debt solutions?

The National Credit Regulator of South Africa created debt counselling with the primary aim to assist over-indebted consumers while still allowing credit providers to maintain the stability of their books.  

An effective debt management solution will empower consumers with their human rights to afford their living expenses while maintaining a healthy relationship with their credit providers.

Effective debt management solutions, such as debt counselling, aims not only to assist with payments towards debt, but also to improve the understanding of the market and help consumers make informed choices. Good information helps consumers make the best choices.

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