Are You Over-indebted? This Is What to Do About It

Worried man sitting at his desk looking at an open laptop


The South African Reserve Bank says our country's consumer debt amounts to nearly R1.73 trillion, and the National Credit Regulator says that 40% of indebted people are behind on repayments of some kind. While some debt is perhaps a normal part of life, being over-indebted is something that should be avoided.


It's easier to fall into unmanageable debt than you'd think and not everyone who is in financial trouble realises it. This makes the situation even worse; you can't fix a problem if you don't know you have one.


Signs You Are Over-indebted


In simple terms, being over-indebted means your expenses are greater than your salary. In reality, though, it can be hard to recognise the signs that you're not coping with your debt.


Here are some of the signs to watch out for. If you identify with any of these every month, it's important to get debt counselling as soon as possible.


  • You're unable to make all of your monthly repayments.
  • You've maxed-out your credit cards.
  • You're unable to save money or have no emergency fund.
  • You're taking out loans or credit to pay off other loans.
  • You've dipped into your retirement savings to cover credit and expenses.
  • A creditor has placed a judgement against your name.
  • Creditors relentlessly call you to ask for payment.
  • You're ashamed of your debt and keep it hidden from your family.


If none of the above applies to you but you're making only the minimum monthly payments on all of your debts, it would be wise to keep a close eye on your finances. If you're careful, you can avoid getting into a bad financial situation.


The Solution: Debt Counselling


Debt counselling is an efficient and cost-effective way to manage debt. It's legislated by the National Credit Act, which means your debt counsellor has to abide by certain laws that are there for your protection.


A debt counsellor negotiates with your creditors on your behalf to come up with a repayment solution that you can manage. Often, this will involve extending the payment term and reducing the monthly repayments. Sometimes, debt counsellors can get you a better interest rate too, so you may end up paying less in the long run than you would have before.


You may be placed under debt review, which protects your assets from debt collection but prevents you from applying for any further credit before settling the existing debt. Your new payment plan can be confirmed with a court order which allows you to pay a single monthly amount rather than paying multiple creditors. A payment distribution agency takes this single amount every month and pays all of your creditors with it.


You will pay a fee to the debt counsellor, the amount of which will depend on your personal financial situation. This amount is worked into your new payment plan, so you don't need to worry about taking out more credit, just to pay for it.


There is no shame in being over-indebted. It's easy to get stuck in a debt cycle and it happens to many people. There is always a solution, and the earlier you start paying off your debts, the sooner you can get your life back on track.


Sources: IOL; Times Live;


Prices quoted are correct at the time of publishing this article. The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.

Compare Car Insurance Quotes

Our trusted partners