Tips to avoid over-indebtedness - some of the things you can cut and-or adjust in order to stay afloat

THE National Credit Regulator (NCR) has jumped on the bandwagon to educate and inform consumers on credit, and to help them avoid over-indebtedness and to save.

NCR manager Obed Tongoane said of the 18,6 million credit-active consumers, nearly half had impaired credit records and were battling to service their debt.

He said the number of consumers with impaired records increased by 20,000 to 8,63 million in March 2011 quarter, from 8,61 million in the December 2010 quarter.

He said consumers who were battling financially and were falling behind with their debt repayments should avoid accumulating more debt.

"They should rather downgrade and change their lifestyle," he said.

He advised consumers to contact creditors and discuss their situation with them first when they experience problems with repaying debts.

"If you are not winning with your creditors, you have an option to approach a registered debt counsellor for assistance."

He said over-indebted consumers may approach a debt counsellor directly, or may be referred to a debt counsellor by creditor/s or by the magistrate's court. Tongoane advised consumers not to wait until they received letters of demand or section 129 letters before taking action, as it would be too late by then.

"That particular debt will not be included under debt counselling," he said.

Once you have applied for debt counselling you may not get any further credit until your debts have been repaid or you have been issued with a debt clearance certificate.

A debt counsellor is someone who is registered with the National Credit Regulator and who assists consumers experiencing debt-related problems and are having difficulty meeting their current monthly repayments by providing them with budget advice, support and mediation with credit providers.

Tips to avoid over-indebtedness - some of the things you can cut and-or adjust in order to stay afloat:

- Prioritise, pay your home loan first;

- Use public transport where possible; and

- Cut down on alcohol, cigarette, entertainment, club membership, satellite TV and gambling.

You will find that by cutting these items out of your budget, you might have more cash to either save that money or pay more on your accounts; thereby reducing your monthly debts.

Use this as an economic strategy to assist you to get by:

- Do not cancel your short-term insurance cover. If something happens to the car you might be faced with higher costs than if insured;

- Start saving today - saving some money every month will assist you in future;

- Do stick to your budget; and

- Never skip your payments - even when you are under debt counselling, because failure to pay could result in you losing your house or car.

Consumers who are struggling under the yoke of over-indebtedness can log on to www.ncr.org.za for a list of debt counsellors or alternatively call 0860-627-627 for assistance and advice.