Debt is the money you owe to a creditor / lender.

The lender may be a bank, credit card company, payday loan provider, furniture store, or an individual.

Debt is generally subject to contractual terms regarding the amount and timing of repayments and interest.

Loans, bonds, notes, and mortgages are all types of debt.

Do you feel like you are just paying off debt and never seem to have any money left over for yourself?

Don't be tempted to ignore the problem and hope it just goes away - it won't!

The sooner you decide to take debt on and begin rectifying issues out, the easier it is to remove the pressures of being in debt.

Call a Kudough Credit Coach to help get you back on track.

A consumer is over-indebted when he/she is unable to pay all his/her financial obligations timeously, as agreed in a credit agreement.

In such instances, the debt becomes a major burden and when it gets really out of control it can lead to the repossession of your car or house and become emotionally overwhelming.

Do a Kudough debt assessment and see if you are at risk.

You need to borrow money to pay debts You skip payments on certain accounts in order to pay others.

You use one credit card to pay another.

You cannot pay your bills at the end of the month.

You receive letters and summonses from creditors and/or lawyers.

You are thinking of being placed under administration.

You also consider leaving your job to gain access to you pension fund.

You have defaults or judgements granted against you.

Do a debt assessment and gauge your risk Get a credit report and see which debt needs to be addressed.

Do not live beyond your means, have a budget and stick to it.

Cut/reduce spending on the luxury or unnecessary items Reduce large expenses, drive a less expensive car or buy down on your property.

Review your insurance policies – you may find that you do not need some of them Use savings you made from your adjustment to pay the most expensive loans, such as micro-loans and credit cards Supplement your income with a second job

Debt Counselling is a means of assisting over-indebted borrowers which ensures sufficient protection against a loss of assets while assisting with the restructuring of debt in order to ensure a consumer can meet his / her basic living expenses.

The National Credit Act formally introduced Debt Counselling to assist over-indebted consumers, especially in the aftermath of the last economic crisis.

The goal of Debt Counselling is to develop an affordable repayment plan that is also acceptable to all your credit providers.

Your current monthly payments will be restructured and a court order on your behalf will be obtained.

*Administration: is a legal process, where instalments are reduced, but creditors only receive payment every three months.

The terms of repayment is much longer than under Debt Counselling.

To qualify, debt must be less than R50 000 to qualify. Debt Counselling was brought in as a much better option to replace Administration.

* Sequestration is a legal process where all your debts are written off, giving you a fresh start.

This is an option available to you if your available income is not enough to restructure your current credit agreements and your liabilities exceed your assets.

In such a case a reasonable payment plan may be proposed to your creditors.

No

No, you will not be black-listed. However, if you are found to be over-indebted, the debt counselor will add a flag to your credit record asking creditors not to lend you more money because of the fact that you are already over-indebted.

This will be removed once the debt has been repaid and when you are no longer over-indebted.

All Credit Agreements can be included. Service Agreements, such as water and lights accounts or cell-phone accounts, cannot be used. Note that, any accounts on which judgment has been taken cannot be included.

Contact the debt collector and make arrangements to pay-up rather than hide away.

Interest and costs are added to accounts handed over to debt collectors, and it is therefore a good idea to contact the debt collector as soon as possible before the costs and interest become too high.

Debt or Credit Utilisation is the amount of purchasing power you have, calculated as the total debt divided by the total credit available x 100.

Debt utilisation is up to 30% of your credit score and is expressed as a percentage.

Higher credit utilisation result in lower credit scores.

A debt utilisation ratio is one of the key factors proving a person's credit worthiness to a potential lender.

When a person applies for credit or another type of installment loan, the debt utilisation ratio, when used in conjunction with credit reports, presents the overall health of a person's finances. Finding out a debt utilisation ratio is easy and allows consumers to take actions if necessary, to reduce credit card debt and appear more financially-sound to lenders.

The extent to which something is affordable, as measured by its cost relative to the amount that the purchaser is able to pay.

If you have a disposable income of R1000.00, new debt below that value may be viewed as affordable where new debts above that will be viewed as unaffordable.

Affordability is a key factor when applying for credit and very often the reason for being declined.

The best measure of disposable income is income divided by the cost of living.

This includes all debt being serviced, the cost of housing, energy, transport, purchasing food, child care and everything from grabbing a chocolate bar on the way home, to buying a new pair of jeans, to tickets to the rugby game.

Affordability / Disposable Income Calculator: calculates as a Rand value and % disposable income to total income.

e.g. Income = R10 000 Expenses = R9 000 Disposable income = Income – Expenses = R 10 000 – R 9 000 = R1 000 Disposable income / Income = R 1 000 / R 10 000 *100 = 10% of income

You can apply for a consolidation loan from a credit provider.

Your qualifying debt will be consolidated into a new credit agreement with new terms and interest rate, very often bringing your debt repayments down.