Exclusion of home loans 'not the answer', say counsellors
Excluding your home loan from debt review is not the answer to prevent you from losing your home if you're over-indebted, Paul Slot, president of the Debt Counsellors' Association of South Africa (Dcasa), says.
Slot says that, instead, consideration should be given to:
Reducing the interest rate and other costs payable on all debts until unsecured debt has been repaid and you can afford to resume normal home loan payments.
Defined requirements for home loan repayments for consumers under debt review. Slot says the repayment should be equal to or no more than, say, 80 percent of the contractual repayment.
"This would extend the home loan period by 20 percent, and any court would accept this as a reasonable repayment," Slot says.
Active enforcement of the law regarding reckless lending. Where credit has been extended recklessly, a court can be approached to declare the debt "reckless" and set aside the repayment of that debt, putting you in a better position to repay other debt. Slot says that until now, this has not been actively pursued by debt counsellors or the courts, but this is changing.
Active review of your standard of living to ensure the maximum possible amount is made available for debt review. Slot says this function is performed by debt counsellors, who review your budget annually.
"This helps you restructure your budget and gives credit providers peace of mind that the maximum amount is being made available for repayments."
Slot says if all of these proposals were implemented by all parties involved, it would result in a "win-win" for both consumers and credit providers and offer a solution that does not jeopardise the rights of other credit providers to be repaid.
Posted at 07:32AM Nov 12, 2012
by Editor in Market |