Are you struggling to pay your creditors? Do you dread answering the phone because it can be an attorney or creditor demanding payment? Looking for debt solutions for you? If you have substantial debt and are unable to pay the creditors, you will need a long-term solution.

A debt consolidation loan can only work if it is sufficient to cover all the debts, otherwise you just add to the debt burden. You also need to consider the interest rates associated with fixed-term loans. Fixed-term loans negatively affect your credit score, because such loans are considered bad forms of credit. Another one of the debt solutions for you to consider is debt review. It is a legal process whereby your debt counsellor negotiates with creditors to have the interest reduced and to provide for a lower, consolidated monthly instalment on all the debt. A court order is issued that states what the consolidated monthly instalment should be.

A distribution agency places a debit order on your account and the money is distributed amongst the creditors according to the court order requirements. Your creditors cannot take any further legal action against you and, as long as you do not miss a payment or make late payment, the debt review stays in place. Once all the debt is settled, you receive a debt clearance certificate. The “debt review” status is removed from your credit records and you can enter into credit agreements. It is one way to restore your credit rating and to pay off debt in a more affordable way.

However, even under debt review, you may still struggle to pay the monthly instalment and not have enough money to pay for living expenses. If you are under debt review and your home loan forms part of the process, it will take you several years before the debt is paid. For the entire period, you will not be able to enter into any credit agreements, may struggle to find rental accommodation, and if you miss a single payment, lose your assets and face judgments.

If you owe a substantial amount on your home loan and vehicles, one of the alternative debt solutions for you is voluntary sequestration. Instead of having to pay for years on end, you will be able to get rid of up to 80% of the debt in one go. The remainder is payable without added interest over a period of up to 24 months or in lump sum.

Call our attorneys for more information about sequestration and to help you determine if it is one of the right debt solutions for you.

Note: This article is for informational purposes only and does not constitute legal advice. You are advised to consult with us before using/relying on this information. Information is relevant to the date of publishing – April 2018.