The news about a debt relief bill for over-indebted South Africans has been doing the rounds for a while now. Just last week, the final bill was passed by Parliament’s trade and industry committee. There has been lots of speculation around who and how the bill will benefit. Questions around who and how much will be written off have been going around and finally there is a bit of clarity. The National Credit Amendment Bill seeks to assist low-income consumer who have a large debt burden with no relief in sight.
Let’s Have A Look At The Nitty Gritty
The bill will look at debts of struggling individuals earning R7,500 or less per month. Current debt solutions, such as sequestration and debt counselling, do not account for low-income earners. This is mainly due to the high cost of servicing these clients. Low-income, over-indebted consumers have very few options when it comes to getting out of debt. Debt is often used to pay off other debts which amounts to large amounts of unaffordable, unsecured debt.
Will All Of Your Debt Be Extinguished?
Debts will only be written off once all other options have been explored. These include stretching the current debt terms to 12-24 months as well as reducing interest rates. If the consumer is still struggling after this period of time, the extinguishment of debt, or a portion thereof, will be considered. These negotiations and reviews will be done by magistrates.
The bill also encourages responsible lending and borrowing by all in the industry. Applicants will go through the National Consumer Tribunal under this process.
What If I Don’t Qualify?
If you earn more than the R7,500 maximum, you may not qualify under this debt relief bill. There are other options for you if your debts are too high and you need some sort of assistance . If you’ve missed debt repayments and may be over-indebted you need to speak to a debt counsellor.
A debt counsellor will have a look at your full financial situation. They can then assess your affordability by looking at your budget and credit report. Based on the outcome they can advise you on the best solution going forward. For a free assessment, call an expert from Vantage Debt Management today on 087 238 2749 or fill out a callback form here.