Using your rights to not lose your assets due to debt

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South African consumers are more over-indebted than ever before and are increasingly at risk of losing assets such as their homes and vehicles. For many this risk is further driven by the lack of education about consumer debt rights. This Human Rights’ month, DebtBusters focuses on your right to debt counselling and the asset protection benefit it offers you.

“The number of enquiries from consumers with assets, especially vehicles, continue to increase, indicating that consumers are struggling to keep up with high debt repayments,” says Benay Sager, COO of DebtBusters, SA’s largest debt counselling firm.

DebtBusters’ own data shows that the share of solely secured lenders’ debt (MFC, WesBank, SA Home Loans, and other non-bank secured lenders) is now 22% of all debt (up from 17% in 2013). This indicates that more consumers with assets are at risk, and not only those with unsecured debt like personal loans and credit cards.

Another interesting trend is that consumers have significantly fewer credit agreements (6,4 on average) compared to previous years (9,2 agreements in 2013), indicating they are becoming over-indebted faster.

The National Credit Regulator (NCR) affirmed this as it outlined that 35,8 % of consumers are between one to six months in arrears on credit payments in its most recently published Credit Bureau Monitor.

Looking at consumer behaviour, confirmed by the NCR, it’s concerning to see that too many people are using as much as 61% of their income to service debt,” says Sager. “While there are no quick fixes, knowing your rights as a consumer and where to go for help is key.”

The NCR outlines debt counselling as one of the best debt rehabilitation tools.

“According to the National Credit Act consumers have the right to apply for debt counselling. This is one of the biggest debt relief measures available in South Africa and offers consumers protection against creditors,” says the NCR.  

When it comes to your assets, one of the critical ways in which a firm like DebtBusters and the debt counselling process it specialises in can help you, is by protecting you against repossession.

Repossession is typically the final tactic used by creditors to try and recover the debt and involves them taking back and selling the asset on auction in order to obtain funds.

“As long as you keep up with your debt counselling payments you are safe from legal action from your creditors. We urge our clients to contact us as soon as they are presented with intent of asset repossession and act on their behalf to prevent this from happening,” adds Sager.

“In the last six months alone DebtBusters has engaged with more than 60 000 consumers with debt management enquiries and produced thousands of debt clearance certificates already for clients who successfully completed the process and are now officially debt free.”

But the challenge of bridging the divide between the debt counselling industry and over-indebted consumers remains.

“Consumers are uneducated about their debt rights. This coupled with lack of education about finances, proper budgeting and myths surrounding the debt counselling process make our task as an industry that much harder. But we are driven by our desire to prevent you from losing your house and or vehicles, while getting you back to being financially secure,” adds Sager.