In another twist involving the public protector’s office‚ the Minister of Co-operative Governance an.
I listen to Kaya FM's Phat Joe's morning show every day and I am intrigued by callers who want to change their phone numbers in an effort to hide from creditors who are pursuing them for payment.
This is no longer necessary. Consumers can now rearrange their debt repayments by approaching debt counsellors for help.
The aim of the National Credit Agreement's Act is to provide a consistent and harmonised system of debt restructuring to help responsible consumers find credit solutions.
Section 86 (7) (b) of the Act states that a consumer who is not over-indebted but is experiencing or likely to experience difficulty to repay debt on time can go to a debt counsellor.
A debt counsellor will recommend that a credit provider and the consumer agree on a debt rearrangement plan.
First National Bank (FNB) has also invited its clients to come forward and restructure their debts.
Most South Africans are feeling the pressure from rising interest rates, said Barrett Whiteford of FNB's card division. He appealed to customers to approach the bank for help.
"FNB understands that these are tough times for everyone," Whiteford says. "We remind customers that we are here to support them in finding solutions to their debt problems. But they must take the initiative and come to us before the status of their account reflects negatively."
The Reserve Bank has hiked interest rates 10 times since June 2006. The increases have pushed the repo rate to 12 percent. Commercial bank's prime lending rate hovers around 15,5percent.
All this has had a huge effect on debt servicing costs for most families. This, and rising food and fuel prices, have further depleted disposable incomes.
Whiteford said his bank will restructure customers' debts, offer them a special arrangement or find them a suitable repayment plan.
FNB home loans chief executive Jan Kleynhans says: "These are tough times. Evidence indicates that the pressure from the rising cost of living is felt by all consumers."
He, too, advises customers who are unable to honour home loan repayments to contact the bank and discuss repayment terms.
"The last thing FNB wants is to repossess the homes of defaulting customers. The process of repossessing a home has proven to be costly and burdensome.
"We would rather sit down with a customer and work out favourable ways in which they can repay their debts."
Whiteford says the process begins by individual customers acknowledging that they have a problem and taking steps to extricate themselves from it.
He says customers cannot stop paying their credit cards without consequences.
"Ineffectively managed debt has long-term consequences," he warns,
Kleynhans says one of the options used to restructure debt is to allow customers to pay only the interest portion of the home loan.
This arrangement continues until the customers' financial circumstances improve.