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What options do I have if I can't pay my debt?

Did you know: almost half of a South African's salary is spent paying debt, with the average South African spending 47% towards debt. And even worse within the middle class, this percentage rises to nearly 80%. These statistics are according to the latest Credit Stress Report by Eighty20. 

1. Contact your creditors to make payment arrangements 

Before you miss a payment, try your best to contact your relevant creditors if you find that you won't be able to make this payment. This is important because you want to prevent the debt collections process  and you don't want a missed or late payment to go on your credit report. 

2. Consider a debt consolidation loan

A debt consolidation loan is a loan intended to consolidate all your smaller debts into one larger debt (loan). This could benefit you because it makes the repayment of debts easier. You now would only have to pay one debt. You could also get a loan a lower interest rate if you qualify. 

The cons of a debt consolidation loan

The interest rate on the loan could be high, depending on your credit score and your affordability. 

If you have a bad credit history, you will likely not qualify for a debt consolidation loan or qualify with a high interest rate. 

These loans are only a temporary fix and you will need to take on debt to pay off debt. 

3. Consider debt counselling (debt review)

Debt counselling is a debt relief programme that is regulated by the National Credit Regulator (NCR) and was introduced by the National Credit Act (NCA). It is intended for South Africans who are considered over-indebted (unable to pay their debt). 

How does debt counselling work?

After applying for the programme, a Debt Counsellor will conduct a financial assessment to determine if you are in fact over-indebted. They will do this by looking at your income and all your expenses. If you do not have a reasonable living budget after paying for your debt, you will be considered over-indebted. 

One way to determine if you are over-indebted is to check if you're spending more than 50% of your salary on servicing your debt. 

Read this blog post to find out other criteria you can consider to see if you really are over-indebted. 

Once a Debt Counsellor determines that you are over-indebted, they will then work out a new repayment plan by consolidating all your debt and negotiating with your creditors to lower your interest rates on your loans. 

This new repayment plan will then be taken to Court. At this point, your assets (your home and your car) are legally protected from being repossessed. This also lets creditors no that they can no longer harass you. 

You will then start paying ONE, reduced monthly payment for all your debt. 

Who is Meerkat?

Meerkat is a financial wellness company that wants to help South African consumers do MORE with their money. MyMeerkat FSP is an authorised financial services provider (FSP 50979). Registered Debt Counsellor NCRDC 2613.

We've been voted as one of the Top 10 Large Debt Counsellors in the country. 

DRA 2023 Top 10 - email - Large[2305843009242846645]

We've helped thousands of South Africans get out of debt! We can help you too. Fill in the contact form on our website to receive a free callback from the Meerkat team today.

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