Five signs that you over-indebted and how to get help

Five signs that you over-indebted and how to get help

There are many reasons why people take on debt, but sometimes it can get out of hand. In this article, we look at signs that show if you are over-indebted. 

Debt/ iStock

Almost 80% of South Africans seek expensive unsecured loans to help them meet their monthly financial obligations, reports Business Live.

There are different types of debts.

Debt Busters lists them as follows:

- Mortgage: The home you are financing secures the loan.

- Car loan: The car itself is the loan collateral.

- Home equity loan: Your home secures the debt.

- Secured credit card: The money in your savings account or a certificate of deposit collate rises your secured credit card.

- Line of credit: Depending on the type of credit line, it may be secured by your home, the funds in your bank account, a certificate of deposit, or some other asset you own.

- Unsecured debt is a type of debt that relies on your written promise, with no secured collateral.

READ: Money Talk: Expert advice on how to make it through January without taking on debt

Although taking on debt can help relieve you for a short period of time, sometimes one might struggle to pay it off.

Signs that show if you are over-indebted

Personal finance website JustMoney has listed the following as signs of being over-indebted.

·        You cannot keep track of which credit providers you are paying every month, and how much you are paying. 

·        You are unable to manage your monthly spending. 

·        You find yourself taking out loans to get through the month. 

·        The majority of your income is allocated to your debt. 

·        You have a judgement or default against your name.

How to get help if you are over in-debted

Talk to your banks and lenders

Don’t just skip payments, but arrange with your banks and lenders before the payment is due to make alternative payment arrangements.

Sometimes they can offer you a holiday break or negotiate your payment period so that you pay less.  

Claim from your credit insurance

Credit insurance is a type of insurance policy purchased by a borrower that pays off one or more existing debts in the event of a death, disability, or in rare cases, unemployment, states

Check if you took out a credit insurance when you got your credit. If you are unemployed or have been badly affected by coronavirus pandemic, you might be able to claim and enjoy a break from having to pay back your credit for a few months.

How to get help if you are over-indebted

Talk to your financial advisor.

He/she will you decide on the best action to tackle your debt. The advisor will take your income and expenses into consideration.

READ: Biggest Debt: How good or bad are you at managing money?

Image courtesy of iStock/ @Dilok Klaisataporn

Show's Stories