Debt Management

Managing Repayments

Once you have taken credit, pay on time and pay the minimum amount indicated on your statement.
If you do not pay on time, you may be charged late payment charges and more interest added to your outstanding balance.
If you can afford to pay a little bit more than the minimum amount indicated on the statement, do so – this will help you finish paying off your debt quicker and reduce the interest you pay.
It is also important to notify the companies you owe if you change phone numbers, postal addresses or email addresses – so they can continue sending your statements to the correct address.
If you can be able to pay a smaller amount let the credit company know and see if they will allow you to make smaller payments that you can afford. If you are unable to pay at all, request to temporarily stop making payments for an agreed period and you can restart payments at a later agreed period.
Remember, you will still be responsible for the amount you did not pay during that temporary break you will still need to repay it when your situation improves. If you have been retrenched, have been put on unpaid leave or have become disabled, check if you don’t have any credit life insurance, the credit insurance may cover your credit repayments for up to 12 months. Credit life insurance is an insurance product intended to cover the cost of your debt if you aren’t able to pay it back due to disability, unemployment or death. You often have to opt-in for Credit Life Insurance when you are taking credit; therefore, it is not automatically given to you.

Credit Profiles

Credit bureaus are custodians of our credit information, they keep a record of how we manage our credit if we pay on time and how much debt we have.
When you apply for a loan or buy something on credit, the credit providers will review your credit profile to determine if you are eligible for credit and to determine the interest rate they will charge.
If you do not handle your credit repayments well, creditors may list adverse information such as defaults (accounts owing and in arrears for over three months) or list court action and judgements taken against you or other negative information such as trace - where credit providers have been looking for you and ask to be notified when your new contact details are loaded on your report.
Check your credit profile once a year, you are entitled to one FREE report per year from each of the credit bureaus. The three big credit bureaus are TransUnion, Compuscan and Experian.
Maintain a good credit profile by paying instalments on time and paying the amount indicated on your statement or more.

Steps to Reduce Debt

You can start by listing all the companies and the people that you owe,
the total amount that you owe each company/person,
the interest rate they are charging,
the monthly instalment amount and
The loan term (how long you are supposed to pay for that loan).
Add up all the totals owed, and work out in your monthly budget, where you can reduce costs. For example, by cutting down on the money you spend on takeaway food and entertainment.
Use the money available after you cut down on spending to pay more towards your monthly debt.
Continue paying the minimum instalments on all your debt, but if you can afford it, choose one debt at a time, where you will be paying more than just the minimum payment.
Focus on the debt with the highest interest rate on your list.
Don't take on new debt as you finish paying off each debt. Your aim is to reduce your debt overall and where possible, to eliminate it completely.
When you have reached your goal of debt reduction, you can put the money you used to pay in debt instalments towards savings, starting with building an emergency savings fund.
You can use the debt reduction scoreboard below to help you track your debt and work at reducing it. Complete the scorecard every month to check how much money you owe. Fill in how much you owe each person or institution. Add up the amounts in each column. Then add the three columns together. This is your monthly score. Remember you want your score to GO DOWN each month. This means you owe less money than the month before.

Debt Counselling

Debt Counselling is a formal debt relief and rehabilitation programme introduced by the National Credit Act in 2007.
It is aimed at assisting over-indebted consumers / consumers who are overwhelmed by their loans or money that they owe and who are struggling to meet their monthly debt obligations / repayments and to meet their living costs every month.
So, if you find yourself frequently skipping debt repayments, receiving letters of demand or summons from creditors, having to borrow money to pay debts and struggling to meet your basic needs, debt counselling could benefit you. It is also called debt review.
You are protected under debt counselling, the companies you owe cannot contact you to make demands or to take further legal action. It’s also important to know that you will not be permitted to take any further credit whilst undergoing debt counselling or review. You can find a list of debt counsellors from the National Credit Regulator (NCR).
The debt counselling process is not free. Debt Counsellors will charge a fee and that needs to be disclosed to you upfront – they should tell you how much their service will be when having the initial discussion with you – before any agreements are signed.
You may check with the National Credit Regulator on whether the person or company you are talking to is accredited by them to operate as a debt counsellor and on the allowed fee structure.
It is important to note that debt counselling will only assist you with formal debt taken from registered lenders and can not help you with loans form informal lenders or mashonisas. Whilst undergoing debt counselling, this will reflect on your credit profile, however once all debt is paid and a clearance certificate is issued, no permanent mark will be left on your profile.

Debt Consolidation

This process differs from debt consolidation, consolidation means you get an additional bigger loan that will pay off all your existing smaller loans and you only pay one credit provider. Debt consolidation does not include or provide legal protection, it simply means you get another loan to pay off your existing loans.