Results 1 to 4 of 4

Thread: Getting out of debt

  1. #1
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,977
    Thanks
    3,055
    Thanked 2,462 Times in 2,067 Posts
    Blog Entries
    12

    Getting out of debt

    It looks like credit providers are coming to the party with debt relief mechanisms that could work - if the debtor makes the effort too!
    The indebtedness of consumers is soaring as the local economic outlook continues to sour, but there may be hope on the horizon.

    Over 41% of all credit accounts belonging to the 17,56-million credit active South Africans are delinquent, according to the newly launched National Debt Mediations Association (NDMA), set up under the auspices of the National Credit Act.

    In addition, the portion of household net disposable income that is applied to service debt is at an "alarming" average of 75%.

    But the credit industry, including banks, debt counsellors and payment distribution agents, under the auspices of the NDMA, has created a debt review process that will enable over-indebted consumers to deal more effectively with their bills.

    Simply put, the proposed review process obliges credit providers affiliated to the NDMA to offer customers a step-by-step programme to renegotiate their mortgages, vehicle loans and short-term loans, says Tjaart van der Walt, CEO of the NDMA.

    Based on four rules that must be followed in sequential order, the review process is designed to improve greatly consumer credit rehabilitation.

    The process can, however, only begin if consumers agree to restructure their budgets, liquidate non-essential assets such as holiday homes and to put a stop to spending on non-essential items.

    From here, rule one allows for the extension of credit terms for mortgages for up to 360 months, vehicle loans to 1,5 times the original loan term and short-term loans to three times the contractual term.

    If this does not work, rule two allows the adjustment of loan interest rates on a sliding downward scale to the minimum of the Repo rate.

    Should these measures fail and consumers have a mortgage, an application can be made for payment of a holiday in instalments of up to a year while they deal with their other debts, as per rule three.

    Finally, rule four is applied if this doesn't work either, with a further 12 months' reduction in yields on all other loans, except a mortgage, to a minimum of 0%, the condition being that the consumer's finances improve within 60 months.
    full story from M&G here
    Personally I think that looks quite promising.
    The trouble with opportunity is it normally comes dressed up as work.

  2. #2
    Platinum Member Marq's Avatar
    Join Date
    May 2006
    Posts
    1,296
    Thanks
    73
    Thanked 283 Times in 216 Posts
    These figures and the proposed rules appear to be no different that the numbers and rules that were around in the 80's....and the 90's and last few years.

    Extension of term does not really help anything - at a 13% bond you are saving about R60pm per R100k outstanding. No real saving. We tried this with the low cost housing finance scenarios in the early 90's without any success. All it does is delay the inevitable and make the mortgage bond holder really miserable for another 10 years.

    Holidays on instalments also just delay the inevitable as the new higher instalment kicks in a year down the line with a heavy impact. People in debt tend to continue to spend spare cash and do not save. They will minimise the instalments due and spend the spare cash on a holiday (well deserved after this pain isnt it) or may a new outfit (I really deserve this after having gone without for two months now) or splash out at the local fancy restaurant toasting the success of having beaten off debt once again.

    Having seen this so often, I think the the only rule to be applied is rule one - applied strenuously and fairly through some sort of friendly administration if you are in deep trouble or just some self governing scenario if you are not. Rule 2 onwards is just about making excused for the inevitable.

    If you are saying that its easy for me just to just say this stuff - I have been there. 10 years ago had huge judgements against me, no job and prospects of being a total failure. Through some discipline and hard work and a vow never to go under - it took 7 years to come back into a positive situation again and since then, never looked back.

    Remember - Mort = Death - Gage = Grip - thats what the banks have you in - a deathgrip. Avoid debt and live free. Its hard to save and the time just drags on and on, especially when one is younger - but its really worth it in the long run.
    The cost of living hasn't affected its popularity.
    Sponsored By: http://www.honeycombhouse.com

  3. Thank given for this post:

    Dave A (01-Jun-09), Morticia (01-Jun-09)

  4. #3
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,977
    Thanks
    3,055
    Thanked 2,462 Times in 2,067 Posts
    Blog Entries
    12
    Quote Originally Posted by Marq View Post
    People in debt tend to continue to spend spare cash and do not save. They will minimise the instalments due and spend the spare cash on a holiday (well deserved after this pain isnt it) or may a new outfit (I really deserve this after having gone without for two months now) or splash out at the local fancy restaurant toasting the success of having beaten off debt once again.
    I have to agree this is the core of the problem.
    Quote Originally Posted by Marq View Post
    If you are saying that its easy for me just to just say this stuff - I have been there. 10 years ago had huge judgements against me, no job and prospects of being a total failure. Through some discipline and hard work and a vow never to go under - it took 7 years to come back into a positive situation again and since then, never looked back.
    So you're also a member of the "I dug myself out of sh*t" club, Marq. Well done.

    I wonder how many of us there are round here?

    I was thinking - this is as much about behaviour change as anything else. It's a mindset. Maybe if we could just tell people how good it feels when you get out from under that weight and that the discipline it takes is soooo worth it.

    But then, until you've been seriously flogged by the system, do you truly appreciate the issues enough to make that behaviour change?
    The trouble with opportunity is it normally comes dressed up as work.

  5. #4
    Platinum Member Marq's Avatar
    Join Date
    May 2006
    Posts
    1,296
    Thanks
    73
    Thanked 283 Times in 216 Posts
    until you've been seriously flogged by the system, do you truly appreciate the issues enough to make that behaviour change?
    Thats the other unfortunate truth to this scenario. Rock Bottom and in some cases the center of the earth has to be touch before the wake up call strikes home. We all like our comfortzones and stay there as long as possible.

    As long as one can see the good come out of the bad and have a vision (not a plan to make a plan) anything is possible.
    The cost of living hasn't affected its popularity.
    Sponsored By: http://www.honeycombhouse.com

Similar Threads

  1. Debt counsellors fleecing debtors
    By Eugene in forum National Credit Act Forum
    Replies: 16
    Last Post: 08-Jul-11, 09:15 AM
  2. [Question] Sale of Debt book
    By pierre.aurel in forum National Credit Act Forum
    Replies: 5
    Last Post: 10-Aug-10, 09:06 AM
  3. NOTIFICATION FROM WORLD DEBT RECONCILIATION COMMITTEE,UK.
    By Vincent in forum Scam Alert Forum
    Replies: 30
    Last Post: 07-Oct-09, 03:42 PM
  4. DEBT REARRANGEMENT PROCESS
    By Eugene in forum National Credit Act Forum
    Replies: 31
    Last Post: 22-Jun-09, 05:16 PM
  5. Functions of a debt counsellor
    By Eugene in forum National Credit Act Forum
    Replies: 0
    Last Post: 20-Jun-07, 08:43 PM

Tags for this Thread

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •