New here? Start with these articles to learn about US bankruptcy, debtor bankruptcy
alternatives like debt consolidation, debt settlement, debt negotiation, and debt management.
You'll also learn the causes of debts that can lead you to file bankruptcy and how to recover
from it.Debt Consolidation, Debt Counselling or Debt Trap?
In boom times it is easy to find new loans and easy to service the loan. The reason is that your house keeps going up in value. This allowed you to do a consolidation loan on your mortgage from time to time. This increased your cash flow so that it was easy to make the monthly payments to creditors each month.
Your living standards increased, because you where buying more luxury items like bigger car and house. But now the boom has turned to bust. Interest rates went up and house prices went down. New loans to sponsor your life style become harder to find, because the banks have tightened lending criteria.
People start having cash flow problems, because their real income does not cover all their expenses. New loans will be taken out to cover the cash flow short fall. Soon or later you will not be able to take out new loans, because of affordability according to the banks new criteria. You need to find ways to increase your income and lower your expenses. One of the ways to cut living cost is to changed your spending pattern and your life style. The problem is that if you have improved your living standards to a bigger house and car, you might find that these large ticket items are difficult to sell in a recession or declining market. In the current market there are no buyers for big ticket items like houses and cars. You are stuck with your expensive assets and with the high monthly payments.
To try and find a new loan to help you pay for your monthly payments is not the answer. The consolidation or new loan will cover a couple of payments, but at the end of the day you will sit with higher loan payments and more debt to repay.
There is a new alternative to debt consolidation, namely debt counselling. People should not apply for a new loan to cover the short fall. They should take responsibility for their debt and apply for debt counselling in South Africa. Debt counselling South Africa will allow you to negotiate lower payments on your monthly payments to creditors with the help of debt counsellors that are appointed by the national Credit Regulator.
You will be protected from your creditors taking you to court while in debt counselling. You will not be allowed to spend money on non essential items and you will have to live according to a strict budget. The debt counsellor negotiate with each creditor on a monthly payment plan that you can afford to pay each month. One payment will be made to the Payment Distribution Agency(PDA) each month and the PDA will pay all your creditors in accordance to your new agreement. You will not be allowed to take on new credit like use your current credit cards and store cards to buy goods.
Your debt counselling will end when you have repaid all your debt or your personal situation changes so that you are able to make full payments to all your creditors.
Contributed Content | Debt Consolidation |
Tags: Debt Consolidation, debt counselling, debt counsellors
As a way of saying "Thank You" for visiting this site here's a free gift for you. This money saving eBook is worth $17.
About this eBook: Are you wasting money? Chances are there are ways that you can easily cut back on your unnecessary spending and you won't even notice a difference. Simply learning about these techniques is the first step to making changes to your finances. We asked money experts what their best tips are for trimming the fat from the average person's budget and here are their suggestions. Click here to download this free eBook. This is a time limited offer and the download link can be taken away without notice. No sign-up form to fill-up, no email address to give, just plain free download!
