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A Fin24 user is struggling to settle his debts amid marriage problems. He writes:
I am in huge debt and could not get a consolidation loan. I've tried debt review but it did not help. What can I do to get R150K to settle all my personal loans and pay one loan maybe for 60/72 months?
I am listed at the credit bureau due to defaults. What I would like to know is until when the arrears will accumulate on my accounts (loans and bond) because I won't at any stage be financially stable to settle arrears.
I got into huge debt due to separation from my wife who refused to honour marriage obligations as we were married in community of property.
I tried to persuade her to go for a free divorce but she refused - I could not afford a lawyer to file for a divorce, meaning that we still legally married.
What surprises me is that the financial institutions are approving credit for her without my consent, which to me is not supposed to be since my debt should also be her debt.
Friedl Kreuser of Summit Financial Partners responds:
This is a bit of a tricky one. I’d like to know why the Fin24 user says debt review didn’t work for him. He may have been with a debt counsellor who did not follow the correct process.
He can of course apply for a consolidation loan with any reputable institution, but he should consider a few things:
• His poor credit rating due to the defaults could mean that he will not qualify for a loan, and the more loans he applies for, the worse his credit rating could get (many institutions use the number of credit report inquiries as part of their credit rating).
Some institutions, however, are willing to give consolidation loans to assist over-indebted consumers, even though it is a risk.
• R150 000 is also a large amount to take a loan for. He should be sure that he is able to comfortably repay the instalment.
My fear is that if he is struggling to pay his loans and bond currently, he may not be able to pay the consolidated instalment either.
• He could make a saving by consolidating his debt if the consolidator is able to get significant discounts on settlement balances.
He should be aware, however, that the high fees often attached to consolidation loans don’t cancel out the potential saving from settlement balances. He should definitely only consider consolidation loans with low fees.
• When applying for a consolidation loan, he should also keep in mind that, since the repayment term will likely be quite lengthy, he must select a loan with a low interest rate, or he could end up paying more interest in the long run.
Unsecured loans tend to have higher interest rates than secured loans (like mortgage bonds) and it certainly wouldn’t help his situation at all if the interest on the consolidation loan is higher than that of his original bond. Then he would just be losing money.
Other than a consolidation loan, I would recommend the user reconsiders debt review with a better debt counsellor, preferably one who knows how to work with the industry’s DCRS rules, which make it easier to get consent from most credit providers.
He also needs to deal with the situation with his wife. If they are still married in community of property and she is making more debt, he could end up being liable for her debt repayments (and vice versa).
If he cannot afford an attorney, he can approach a law clinic for free legal assistance. Many large universities offer law clinics where consumers can get free (or minimally priced) legal advice from qualified attorneys and legal students. They should be able to assist with the divorce.
Alternatively, if he has no other options, he can find a divorce summons template online, or at CAN, and simply take it to his nearest high court and ask the Clerk of the Court to help him issue it.
If they are married in community of property, he can simply ask for all assets and debts to be divided 50/50 between parties. That should also help alleviate his debt burden.
He should keep in mind that any new debts either of them make while they are still technically married, will form part of the joint estate that must be divided when they finally do divorce.
As a further alternative, they could consider marriage counselling and reconciliation. Combining their incomes once again should also help alleviate the debt burden.
Financial stress can put strain on a relationship and sometimes an objective counsellor can help a couple work through the stress in a positive way.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
I am in huge debt and could not get a consolidation loan. I've tried debt review but it did not help. What can I do to get R150K to settle all my personal loans and pay one loan maybe for 60/72 months?
I am listed at the credit bureau due to defaults. What I would like to know is until when the arrears will accumulate on my accounts (loans and bond) because I won't at any stage be financially stable to settle arrears.
I got into huge debt due to separation from my wife who refused to honour marriage obligations as we were married in community of property.
I tried to persuade her to go for a free divorce but she refused - I could not afford a lawyer to file for a divorce, meaning that we still legally married.
What surprises me is that the financial institutions are approving credit for her without my consent, which to me is not supposed to be since my debt should also be her debt.
Friedl Kreuser of Summit Financial Partners responds:
This is a bit of a tricky one. I’d like to know why the Fin24 user says debt review didn’t work for him. He may have been with a debt counsellor who did not follow the correct process.
He can of course apply for a consolidation loan with any reputable institution, but he should consider a few things:
• His poor credit rating due to the defaults could mean that he will not qualify for a loan, and the more loans he applies for, the worse his credit rating could get (many institutions use the number of credit report inquiries as part of their credit rating).
Some institutions, however, are willing to give consolidation loans to assist over-indebted consumers, even though it is a risk.
• R150 000 is also a large amount to take a loan for. He should be sure that he is able to comfortably repay the instalment.
My fear is that if he is struggling to pay his loans and bond currently, he may not be able to pay the consolidated instalment either.
• He could make a saving by consolidating his debt if the consolidator is able to get significant discounts on settlement balances.
He should be aware, however, that the high fees often attached to consolidation loans don’t cancel out the potential saving from settlement balances. He should definitely only consider consolidation loans with low fees.
• When applying for a consolidation loan, he should also keep in mind that, since the repayment term will likely be quite lengthy, he must select a loan with a low interest rate, or he could end up paying more interest in the long run.
Unsecured loans tend to have higher interest rates than secured loans (like mortgage bonds) and it certainly wouldn’t help his situation at all if the interest on the consolidation loan is higher than that of his original bond. Then he would just be losing money.
Other than a consolidation loan, I would recommend the user reconsiders debt review with a better debt counsellor, preferably one who knows how to work with the industry’s DCRS rules, which make it easier to get consent from most credit providers.
He also needs to deal with the situation with his wife. If they are still married in community of property and she is making more debt, he could end up being liable for her debt repayments (and vice versa).
If he cannot afford an attorney, he can approach a law clinic for free legal assistance. Many large universities offer law clinics where consumers can get free (or minimally priced) legal advice from qualified attorneys and legal students. They should be able to assist with the divorce.
Alternatively, if he has no other options, he can find a divorce summons template online, or at CAN, and simply take it to his nearest high court and ask the Clerk of the Court to help him issue it.
If they are married in community of property, he can simply ask for all assets and debts to be divided 50/50 between parties. That should also help alleviate his debt burden.
He should keep in mind that any new debts either of them make while they are still technically married, will form part of the joint estate that must be divided when they finally do divorce.
As a further alternative, they could consider marriage counselling and reconciliation. Combining their incomes once again should also help alleviate the debt burden.
Financial stress can put strain on a relationship and sometimes an objective counsellor can help a couple work through the stress in a positive way.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
