Debt Review Case Study

Phumi is extremely stressed and finds herself in a challenging financial position. She earns R 12 000 per month. Previously she worked over-time to increase her income, but she is now unable to due to changes at work.

Phumi is a single mom with 2 children. Due to changes in personal circumstances and rising costs – Phumi took out the following debt:

 

Account Outstanding Balance Current installment
Old Mutual Loan R 31 250 R 2 650
Absa Credit Card R 8 000 R 1 000
Woolworths Credit Card R 5 000 R 600
Edgars R 4 200 R 510
Jet R 4 000 R 480

 

In total, her installments came to R 5 240 per month.

Although Phumi always kept up to date with the payments on her debt, a few months ago she got a short-term loan (pay day loan) from Barko Financial Services for R 8 000. This amount needed to be paid in full the following month and it took almost her entire month’s salary. Phumi therefore ended up falling behind on her other accounts and struggled to meet her living expenses. As a result, Phumi needed to visit Wonga for another, new pay day of R 6 000.

Currently, Phumi earns R 12 000 but is required to pay a combined R 11 240 towards her debt. She therefore needs to continuously get a new pay day loan every month to meet her living expenses.

Phumi realized her situation is unsustainable and decided to seek help. She did some online research and read some reviews and decided to approach Vantage Debt Management. A consultant contacted her and found that debt review was the perfect solution to help her and her children. Under debt review, Phumi’s R 11 240 total installments will be consolidated into one payment of R 3 500 per month. While her accounts are being paid, she will now have R 8 500 left for herself and children (R 12 000 income minus R 3 500).

Phumi’s financial stress has decreased dramatically because of the debt review solution. Once her accounts are paid up Phumi’s credit record will show no sign of arrears and any information relating to debt review.

Six months after starting debt review, she received an increase at work and started paying more towards her debt. This allowed her to finish paying off her debt much sooner than she expected.

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