With South Africa’s economy in 2018 doing so badly there’s a lot of pressure on South African families to change their spending habits by reducing their spending, especially those who have a lot of debt. As most people know there’s good debt and bad debt. And like most families these debts will be in education and homes. And like most families as well there might be bad debts like massive clothing accounts credit and mounting credit card debt.
Debt restructuring, as it sounds, involves getting your creditors to reduce your monthly payments by getting into a new agreement as to your repayment period (how long you will be making payments), and most importantly how much you will be paying over this new repayment period. This is a good idea, but you must also know that you will be paying more in total amount of interest as you are now spreading your debt over a longer period. It is also a way to avoid taking out a debt consolidation loan because of legal reasons.
Can you do it on your own?
Sure, you can talk to them and see if you can get another payment plan. But it is advisable to get in touch with a debt specialist or financial adviser as they would know what to look for in the new payment plan and if it is beneficial for you.
What process can I look forward to in a debt restructuring?
There’s a typical debt repayment process that might take place:
- Debt Analysis. There will be an initial analysis of your credit scores, your creditors and other factors that determine what the next step for your repayments may be. This will be done by a professional who deals with debt.
- Reports and Recommendations. After your analysis, there needs to be a report or recommendations on how you may restructure.
- Negotiations. A negotiation by a debt professional with your creditors in order to reduce your monthly debt payments.
- Payments. You are now done with your negotiations and you have to be at a place where you stick to your new agreements with your creditors.