Tell-tale signs that you need debt counselling

South Africa is facing a rising debt crisis. The pressure placed on the economy due to the COVID-19 pandemic has severely affected people’s economic situations. More families have fallen below the bread line as primary caregivers have been laid off or placed on contractual employment. Credit providers have become lifelines and people have become dependent on living off their debt. This will only end in many families getting stuck in a debt cycle and unable to break free.

Debt counselling, also known as debt review, is a saving grace for many people. It’s a debt-repayment program that helps people pay back their debt by setting up an affordable repayment plan. With the help of professional debt analysts, debt counselling allows over-indebted consumers to look at their financial situation realistically and find a solution that will help them get back on track to being financially independent.

Many people struggle to make the decision to ask for professional help. Asking people for financial assistance can be daunting and many don’t know the signs that signal that it’s time to get professional debt counselling assistance. Cyber Finance has put together a checklist of tell-tale signs that you are in need of debt counselling services. If you’ve checked more than three of the following boxes, it’s time to go into debt review.

You’re living off your credit.

Credit shouldn’t be used for essential goods and services. This has seriously negative implications for your credit rating and will show credit providers that you are high risk. Living off your credit card means that you aren’t making contingencies to pay back your debt. Once you start relying on credit to buy food, pay rent and fulfil your basic needs, you should see a debt counsellor.

You’ve been threatened with legal action

If you’ve been threatened with legal action, you should seek help from a debt counsellor immediately and go straight into debt review. Going into debt review will give you a 60-day grace period from any legal action. It allows you the time to get your affairs in order and show your credit providers your repayment plan.

You’re caught in a debt trap

Debt traps occur when you start paying off debt with more debt. You will get stuck in a cycle that becomes almost impossible to break out of, as you will start owing money to many people. When you are in a debt trap you are also more likely to be targeted by predatory lenders, who will make your life far worse. As soon as you find yourself needing to pay off a loan with another loan, get help.

Most of your income is going towards debt repayments

If your debt-to-income ratio is more than 40%, and most of your income is going towards debt repayments, you should seek debt counselling immediately.

Your credit rating is too low

A low credit rating will make it difficult for you to consolidate your debt by applying for low-interest loans. Going into debt review will give you the chance to start rebuilding your credit rating to one that presents more favourably to credit providers and financial institutions.

Debt counselling is a very useful programme for over-indebted individuals. It gives you the chance to clear your name, through scheduled repayments, and get back on track to financial freedom. Cyber Finance has a team of debt specialists that will be able to assist you in figuring out what your next step should be.

Book a free consultation today and start planning for your future.