MONEY CLINIC | My wife and I are R150k in debt. I can't afford to repay it, what can we do?

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A Fin24 reader wanting to repay all his debts is struggling to make ends meet. Looking to an expert for guidance on what to do, he writes:

My wife and I are married in community of property and in debt of nearly R150 000.

We have been in debt for quite a while and have stopped paying as I am the only breadwinner in the house. We've had to borrow from moneylenders to make ends meet as my salary doesn't allow me to even pay a cent toward our debt.

We had debt before we got married in community of property but I fear the worst as we are getting phone calls from debt collectors. What can we do? We are struggling every month.

I have inquired about debt review but I fear the process might take too long and I've heard mixed reviews about the debt review process. I have also applied for a debt consolidation loan but I don't qualify.

Our desire is to pay off all our debt as soon as possible, but it seems impossible.

Sebastien Alexanderson, CEO of debt counselling firm National Debt Advisors responds: 

If there is one characteristic which we share as consumers, it is our desire to be debt free and to make due on the promises we made when borrowing the money in the first place. 

Lets face it, when we first think about borrowing money to achieve our goals and realise our dreams – it is very exciting. We make a promise to the lender and ourselves that we will pay back all the money plus interest on time and with a smile.

The same thing happens when we fall in love and get married in COP (community of property). We make beautiful promises to each other and promise to protect one another from all harm and never considering that our previous debt burden could one day become a problem. Marriage is one of our last remaining sacred ceremonies  - and for most of us the thought of asking our fiancé for a credit report before asking them to marry you seems quite ridiculous at the time.

(Personally I believe that for most, the results of the credit search would most likely not deter the decision-making process.)

Nevertheless, the minute you marry in COP your debts also get married. It’s what the industry often refers to as STDs or Sexually Transmitted Debt, until death do you part.

As is expected when families are created, the burden of raising that family comes with a lifetime of unexpected turns and events which shape the lives we lead. 

For most of us, as soon as we begin working we have access to credit and our propensity to borrow gains momentum. We borrow and borrow - expecting life to remain constant. 

In difficult times the banks are all too happy to help consolidate your debts over longer periods to help you out. It seems the banks only solution to our debt problems is to lend us more money – and put us further into debt!

If Covid-19 has taught us anything, it is that life is full of surprises and that every single one of us has a different set of circumstances when it comes to work, family and life - and we all require solutions that fit our perspective. 

For most of us in these trying times we are facing or will soon be facing a crossroad when it comes to our debts. 

That point comes when your outgoings exceed your earnings. This usually happens when one of the wage earners in the family if not both have a change in circumstances affecting the money they earn and their ability to pay back their regular monthly payments. 

If you find yourself at this point, you will have also found yourself at the end of many telephone conversations telling you that any further borrowings is no longer possible. 

What most people don’t know is that there are solutions available to you when the banks can no longer help you. 

The National Credit Act was written for this very purpose. 

If you find yourself about to - or already have started falling behind on your debts then you need to act. Not acting can be one of the worst things you can do. If you miss too many payments and the solutions available to you become less and less.

A good early solution which offers your assets protection from the creditors is Debt Review or Debt Counselling as it is also known as. 

Debt Review is a solid program which can help you tailor a repayment package according to your personal circumstances. It’s a second chance – and for some  - even a last chance to help you make good on the promises you made when life was normal. 

Remember it takes two to tango, so if you decide on the Debt Review program you need to actively participate and engage with your DC  (debt counsellor) at least once a year to make sure that your information is up to date. Try to increase your payments if possible to get you off the program, and become debt free sooner, rather than later. 

Just like your marriage – your finances will look better when you and your spouse work together to make things better. Debt Review is a viable, safe debt relief option to help you become financially free.

Questions may be edited for brevity and clarity.

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