SM Consolidation

Debt consolidation loans can be used wisely or unwisely, but there are many advantages which debt consolidation offers when used sensibly.

A debt consolidation loan is a lump sum loan taken to pay off multilpe debts. A reason to consolidate smaller debts into one loan is usually to secure a lower overall average interest rate. Basically, a debt consolidation loan replaces high-interest short term debt (examples are credit cards, store cards, personal loans, etc) with a lower interest rate loan which usually has a longer term. Debt consolidation allows you to start a clean slate, by converting your various existing commitments into a single, manageable monthly payment. This also saves on multiple fees, administration charges and costs.

The result of debt consolidation is that the monthly repayment will be lower on the consolidated loan compared to the combined monthly repayments of the smaller debts, which in turn improves cash flow. So if you’re battling to afford your monthly repayments on your debt, this could be a solution to avoid events such as blacklisting and repossessions.

Logically, you should not pay short term expenses with long term debt. However, this may unfortunately be one of the only options open to you. If you are currently in danger of defaulting on your debt repayments, you will need the breathing room from this cash flow improvement to bypass any defaults.

Successful debt consolidation allows freeing up money, therefore you will have more to spend. A smart consumer should either save this money or put extra towards their current debt to benefit from debt consolidation.

There are multiple benefits to Debt consolidation:

- Making a single payment
- The consolidated installment may be less than the combined original installments
- Stress Reduction
- Financial rehabilitation
- Retain credit worthiness
- You may get savings if the debt consolidator negotiates reduced settlement balances with your credit providers

In 2007 a new Act was passed called the National Credit Act (NCA). The purpose of the Act was to regulate how credit is granted, who can give and get credit and what can be done if people have problems paying for their debt.

In the NCA there is a particular section (Section 86) which deals with what to do if a consumer has too many debts, too many obligations and not enough money to pay for everything. This section specifically refers to debt counselling also known as debt review. A Debt Reviewer would be registered with the National Credit regulator. Over time the National Credit Act has been updated or amended (by the National Credit Amendment Act 2014) which helped make debt review even more effective.

Our goal is to clarify how things can be changed to improve your financial situation. If you have been under debt pressure, you should surely have tried to adjust your budget spending. You may even have discarded a few of your utmost required necessities. It is good practice to reduce your monthly living costs, but where to cut and what to keep?

Benefits of Debt Restructuring

There are multiple benefits to Debt Review:

- One fixed monthly payment
- No more creditor follow-up calls
- Avoid blacklisting
- Financial rehabilitation
- Extended payment periods
- Allows everyone to be satisfied as the consumer will be able to pay back the debt in small affordable amounts

We provide professional debt restructuring, debt consolidation, personal loans and debt mediation services. Visit us today at www.sm-c.co.za or contact Shaheema Moses on 074 690 4010 / eMail : [email protected]

www.sm-c.co.za