14 Jun Example of Over-Indebtedness

Posted at 14:00h in Latest News by

Before you can be accepted into debt review, your debt counsellor needs to decide if you’re over-indebted. You may worry that you’re not over-indebted and so will not be accepted into debt counselling. True North Debt has put together an example of what over-indebtedness could look like.

Sarah

Sarah was a single mom who lived in Kraaifontein, Cape Town. She recently lost her second job because of negligible performance. She felt more stressed every day and like she had nowhere to turn.

Because of the cost of living crisis and unforeseen expenses, Sarah had taken out the following credit:

  • Old Mutual: R31 250, monthly instalment of R2 650
  • Capitec Credit Card: R8 000, monthly instalment of R1 000
  • Woolworths Credit Card: R5 000, monthly instalment of R600
  • Cotton On: R4 200, monthly instalment of R510
  • Jet: R4 000, monthly instalment of R480

In total, her instalments went up to R5 240 each month. Usually, she stayed on top of her debt, but on Friday her car broke down and she had to pay an excess of R8 000. She went to Cash Crusaders and took out an R8 000 loan, payable by the following month. It took almost her whole salary, and she is now behind on her other loan payments and struggling to buy food and electricity. So, she heads to Cashcor for another R6 000 payday loan.

Sarah earned R12 000 but found herself paying R11 240 each month toward debt. Every month, she needed a payday loan to support herself and her children.

Sarah realised her living situation was unsustainable– she couldn’t sleep at night, had nightmares, and couldn’t concentrate at work. So she Googled “What to do if I’m overindebted?”

True North Debt popped up and she clicked on the site. Soon, she was in contact with a consultant who let her know that yes, debt review was the perfect solution for her and her children.

Use True North Debt for debt relief.

 

Under debt review, her total instalments dropped from R11 420 to R3 500. While she paid her debt, she had R8 500 left for her and her children (R12 000 – R3 500 = R8 500).

After the first month, Sarah was bright-eyed and smiled easily again. She slept soundly at night and as a result, regained mental clarity. A few months after starting debt review, she got an increase at work for working hard, which she used to pay off her debt more quickly.

Sarah feels hopeful about the future and glad she has financial breathing room.

In this story, Sarah has too much debt and too little income. Then, her car broke down and she had to pay a high excess, necessitating the need for a payday loan. She decided she couldn’t live loan to loan anymore and worked with a debt counsellor. Her quality of life and financial stability improved drastically.

If this story looks a lot like yours, let us help you. You don’t have to live paycheck to paycheck and deserve to sleep well. Contact True North Debt.