Pay off debt quickly to avoid stress

PRIORITISING debts and paying them as quickly as possible can save a lot of stress.

PRIORITISING debts and paying them as quickly as possible can save a lot of stress.

Some consumers neglect to pay debts while others make the effort to rearrange repayments with creditors or through the Offices of the National Credit Regulator.

Then there are consumers who fall into arrears because their creditors' books are taken over by institutions that take time before notifying the consumer of the take over.

Clement Mabaso almost had a heart attack when Nedbank debt collectors demanded almost R60000 when he owed less that R10000.

Mabaso had taken a loan of R4000 nine festive seasons ago. He said he had paid regularly, but started defaulting when the bank took over the account he had with Consumer Credit.

"I was paying regularly, and then I started defaulting when Nedbank took over Consumer Credit accounts," Mabaso said.

His account went into arrears and though he kept paying, the interest kept escalating, he said.

He said he queried the problem, but instead of rectifying it, Nedbank referred his account to their collecting agent.

"Their agent came to my workplace and demanded that I sign an acknowledgement of debt for the amount of R55200. I refused," he said.

Roshelle Pillay, a strategic business communications manager at Nedbank personal loans said that Mabaso owes them R9988.

Pillay said Mabaso did not comply with the terms of his agreement to repay the loan within the agreed 12 months so they sent his account to their collecting agents.

"From the inception of the loan the client began defaulting and missing payments causing the loan to accrue arrears and additional interest. As of December 10 2009, the outstanding balance on the account is R9988.40," Pillay said.

Darryl Lahner, head of credit risk for FNB credit card, said the festive season is associated with overspending.

He said it was important for consumers to seek financial advice as soon as they detect any form of financial strain.

"Consumers need to make sure that they prioritise paying bills such as their credit card to avoid a financial headache in the New Year," he said.

Lahber's tips .

Pay all bills on time. Late payments have a negative effect on your credit rating

lConsider the interest free period by paying your account in full on the due date to benefit from up to 55 days interest free.

Reduce the number of credit cards to lower the tendency to overspend. Contact creditors about your plan and close other accounts.

lAvoid overspending. Differentiate between wants and needs.

lCreate a realistic budget and stick to it.

Get out of debt one step at a time.

lGet mistakes on your credit statement resolved.

lNegotiate for better rates.

lMonitor results and stick to your plan.