Debt management is a way to help you get your debt under control through financial planning and budgeting so that you decrease your current debt and move towards paying it off completely.
You can create a debt management plan for yourself or go through the debt review process to help you with your plan. Both ways have advantages and disadvantages, and in this blog post, we spoke to our Debt Review Consultant, Akhona Ngxongxela, to get his insights into debt review and his 3 top tips to help you manage your debt.
What is debt review?
The South African government established debt rehabilitation programs such as debt counselling and debt review processes to help consumers repair their financial circumstances. These programs, which are still in place today, are there to offer over-indebted people who are struggling to pay off their debts a second chance.
The disadvantages of debt review
Although debt review is a legal process aimed at helping consumers to ease financial distress, here are some of the disadvantages of debt review:
- You cannot apply for credit anywhere while you are under debt review.
- The debt repayment period is extended.
- Your debt review status can reflect on your credit report for 2-3 years or until you have paid your debt in full.
- Legal and administrative fees are included (however, these fees are regulated by legislation).
- If you are married in community of property, both spouses must apply for debt review.
- You cannot negotiate repayments on what you can afford directly with your creditors.
Why debt management is important
To be able to reach your financial goals, managing (and eventually eliminating) your debt is going to be key. Knowing how to develop the discipline to get out of debt will enable you to reach your financial goals, learn how to get better at being financially secure and ultimately make the most out of your money.
3 top tips for managing debt
- Check your credit report regularly: use our partner, ClearScore, to check your credit report for free.
- Budget wisely and determine how much extra money you can pay toward your debt. Read our blog post for the 5 Things to Consider When Budget Planning.
- Pay all your accounts on time and pay off the accounts you can. Use our guide on How to Plan for Your Loan Repayment to help you plan how you will pay off your accounts.
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