When hard times hit, and you face overwhelming debt, it can be very difficult to keep up with all your bills. Falling behind on bond payments can have distressing results. You can very easily lose your property. There is, however, hope for those who find themselves in this situation.
On June 1st, 2007, the National Credit Act went into effect, and Debt Review or Debt Counseling was introduced. If you have over-extended yourself financially, this program is designed to offer help. It provides a consistent system for restructuring your debt, with the eventual goal of satisfactorily meeting outstanding financial obligations and credit agreements.
One option you have is Debt Counseling, which is also sometimes called Debt Review. It was originally developed to help consumers who could not meet their credit agreements and basic living expenses. Under this program, a debt counselor negotiates with all the consumer’s creditors, for reduced monthly repayments. Once a debt counselor contacts these creditors, they cannot take legal action for a determined period.
The debt counselor, on behalf of the consumer, will then negotiate with creditors. They work out reduced monthly repayments, and often manage reduced interest rates, as well. Debt counselors can, and often do, charge a fee.
Another option consumers have is to look into debt settlement. This requires negotiating with creditors and credit card companies, to settle on a specific amount of money to pay the account in full. Most creditors are willing to settle, because they know if bankruptcy is filed, they receive nothing.
Debt consolidation is an option, as well. This requires taking out a loan to pay off several debts. In many instances, this gives the consumer a smaller interest rate to deal with, and offers the convenience of just one monthly payment, as opposed to paying each creditor individually.
Applying for bankruptcy, should be a consumer’s very last resort. When you opt for bankruptcy, the damage to your credit rating is both significant and long term. Bankruptcy requires the debtor liquidate all assets of value. These monies are used to pay creditors, and any outstanding debt is then negated.
For those in bond arrears, the real concern is repossession. An illness or layoff can easily cause a consumer to fall behind in bond payments, and that can result in loss of property when the bank forecloses. One option is to sell your property to investors, which prevents it from suffering repossession. In today’s economical climate, however, it is very important to plan and be prepared for emergencies. There are ways to protect yourself.
One option is getting a Bond Payment Protection Plan. Many insurance companies offer plans that protect and cover your bond payment. In other words, if you are unable to make your payment, due to illness, unemployment, and various other reasons, the insurance company assumes the payment for you. If you choose to go this route, it is important to check pertinent provisions in your policy, and make sure you understand exactly what is covered, and under what conditions.