But the responsibility still remains with consumers to stay out of debt

The National Credit Act came into being to help millions of South Africans avoid debts that they cannot pay. It also hopes to prohibit reckless credit extension and provides debt reorganising in cases of over-indebtedness.

The National Credit Act came into being to help millions of South Africans avoid debts that they cannot pay. It also hopes to prohibit reckless credit extension and provides debt reorganising in cases of over-indebtedness.

According to the act (NCA), consumers can have their repayments rescheduled by the court and pay reduced instalments over a longer period.

Upon completion and satisfaction of all obligations of the reorganisation, a clearance certificate is issued to the consumer. After receiving the clearance certificate, the credit bureau must delete from its records the consumer's bad credit history, including the debt reorganisation.

This automatically puts consumers back on their feet, including the ability to apply for or get more credit. While the benefits of the NCA are good, there is still the danger of consumers being indebted again.

Once you have dug yourself out of debt, you will want to avoid going down that same route again. It is better to live within your means and to avoid debt that you cannot afford.

Here are some tips on how to stay out of debt.

Most people get into debt at some point in their lives, which is normal. In case one cannot get rid of debt altogether, it is wise to at least keep it down to a level where it does not impact on your life in a way that you find life intolerable. Once it is paid off, try to stay away from further debt.

It is easy to get back in the red. Although the NCA will make it difficult to get credit, people still can get indebted.

The problem with debt is not usually about the amount one owes, but about the way a person handles debt. The golden rule is: Never skip payments. If you do this, you will remain in control.

Secondly, don't create further debt when you have outstanding debt. If you do create more debt, you might end up putting yourself and your finances under strain. Keep a close eye on all your finances. Keep up with mortgage repayments and any outstanding loans.

Plan your budget carefully going forward and work out exactly your income and expenditure. If you cannot keep up with repayments on loans or other debts, speak to the creditors concerned immediately after realising it.

Respond to letters from creditors and check your bank statements regularly for debits by creditors, to see if they are up to date.

Only have credit when you really do not have any alternative and you cannot ignore the situation.

Do not expect everything to get better overnight. Be prepared for the long haul to get back into the black and set yourself some intermediate targets to pay off certain debts over a certain period.

Also look for sound advice. There are many institutions that can give you advice whenever you need it. The National Credit Regulator is one such institution.

If everything else fails and you cannot pay back your debts, you may consider filing for bankruptcy. Once you are declared bankrupt, you will no longer have to pay back debts. But this comes with implications because you will not be able to have a bank account and you will not get credit anywhere.

Many creditors are reluctant to file for bankruptcy because they might not ever get loans again. Even when things are really tough, do not jump into bankruptcy. With the implementation of the NCA and assistance from courts, there are alternatives to bankruptcy.

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