MONEY CLINIC | Help! I'm under debt review. My instalment is R6 000 I can only afford R4 500

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Debt Review is about returning your finances to normal and finding financial freedom.
Debt Review is about returning your finances to normal and finding financial freedom.
Peter Muller

A Fin24 reader under debt review wants to know what her options are and if there is help available, as she can't afford to pay her agreed instalment amount.

She writes:

I am currently under debt review. My instalment has increased and with the pandemic my salary was cut. I am supposed to pay a R6 000 instalment every month but can only afford R4 500. What should I do and can [anyone] help me? 

Sebastien Alexanderson, CEO of National Debt Advisors, responds:

As we continue to find our way through the aftermath of this pandemic, many of us find ourselves having to work and live in this "new normal". 

For many of us, this also means  trying to stabilise our income. 

For anyone who is self-employed, working in the tourism, food or hospitality industries (to name but a few sectors) things will remain difficult as the country and world slowly open their doors. 

Anyone currently on Debt Review who has had their income affected, must work with their debt counsellor – so that they may inform your creditors of your current and possible future situation. As debt counsellors we have tools at our disposal that we can use to allow you some room to breathe when your circumstances have changed, as we figure out a permanent plan with your new income.  

Regarding increasing instalments, I can only think of two scenarios where this might be applied to someone under debt review: 

The first is when you begin missing payments on your debt review without informing your DC that you are doing so, and supplying them with relevant information and documentation for why you are doing so. For every missed payment (without reason and communication from your DC) your creditors will expect you to catch up on your payments. It is therefore imperative that you communicate with your DC about any change of circumstances or income.

The other scenario where your instalments can increase, is if you are in the beginning of the negotiation phase (month 1-3).

Your creditors may counter on the initial proposal and ask for a slight increase. However, this should be a once-off, and not continue to increase monthly.

Whatever your situation on Debt Review, if you begin to struggle with any new changes due to Covid-19 or any part of life that might get in the way, you need to communicate with your DC and see what can be done to give your circumstances the most peace of mind. 

Debt Review is about returning your finances to normal and finding financial freedom. If you don’t feel that you are experiencing this with your debt counsellor, feel free to to contact the National Credit Regulator (NCR). They regulate the credit industry, which includes all registered debt counsellors.

Questions may be edited for brevity and clarity.

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