Debt Review: Is it Right for You? Part 2

Nobody chooses to become over-indebted, but we don’t always have the know-how to avoid it. Sometimes circumstances change unexpectedly, and we become over-indebted no matter how carefully we have planned.

Debt review is a legal process.

Debt review was instituted by the National Credit Regulator (NCR) to help you settle your debt over time on affordable terms. A registered debt counselor will negotiate with creditors on your behalf. This means no more terrorizing phone calls from your creditors, and no more fear that you may lose everything.

This part 2 of our 5-part series highlights real stories from our diverse debt review clients. These are people just like you and me, who at one point found themselves in a bad situation with debt.

This is Deon* & Jackie’s* story – a respected, married, middle-aged couple with grown-up children.

Deon and Jackie are married. They are both 52 years old, and their children are grown up. Deon and Jackie are a respected couple, considered pillars of their community. They both work in administrative positions in a government department and participate in volunteer work. But for several years, each accrued debt the other did not know about. It came as an unwelcome surprise when they finally realized that between the two of them, they were severely over-indebted.

Once they became aware of the seriousness of their situation, they immediately started working together to fix it. Their saving grace was their house in a modest suburb which they had already paid off.

“We were tempted to upgrade to a fancier neighbourhood, but if we’d done that, we might never have been able to save the house.”

~ Jackie

Deon and Jackie were considering upgrading to a fancier neighbourhood, but their loan application at the bank was turned down.  Up until that point, they had not realized that they were over-indebted. Jackie wanted to resign to claim her pension payout and use that to settle their debt, but she still had 8 years to go before retirement. Deon’s pension would not be enough to support them into their old age.  Besides that, they would not be able to afford the house on Deon’s salary alone.

When Deon first heard about Cape Debt Clinic, he was relieved.

“It sounded great. We phoned Karin and met with her after work one evening.  Before signing the form 16 application, we knew what we were in for!  This was the way to become debt free before we retired” 

~ Deon

Jackie admitted that it was tough getting used to living on a budget.

“We were so used to using credit cards and only paying a portion back each month. In the beginning there were lots of arguments and blaming, but now our relationship is stronger. On reflection, I always tried to look good for my husband, even if I couldn’t afford it. I didn’t have cash so I used credit cards, until it all became too much. Now we only work with cash. We are both very proud of getting through this successfully.”

~ Jackie

Deon is positive about debt review.

“I think debt review is a good thing. I see my colleagues at work dealing with their debt by taking out consolidation loans again and again.  Consolidations do not work, simply because it doesn’t stop you from using credit. No matter how good your intentions are, soon you start using credit again. Besides that, consolidation is very expensive because that outfit you bought at Christmas payable on a credit card over 6 months, is still being paid off on the Consolidation Loan over the next five years (with very high interest too).  With debt review, you only pay one amount per month which is distributed fairly to the creditors.”

~ Deon

You can see from Deon and Jackie’s story that they did not find the debt review process easy all the time – it was challenging adjusting to their new budget. However, in the long term they are thankful for the positive change it has brought in their lives, and the fact that they can now live debt-free.

Do you relate to Deon and Jackie’s story?

Perhaps you are in a similar situation. There are more stories from other people as well, that we will tell over the coming weeks.

*To protect their privacy, we have not used their real names.