Mr. L is a 46 year old central defense employee, living in Atteridgeville, Pretoria. A widower with two teenage daughters, living with him and dependent on his income, he found himself in changing circumstances which lead him to become over-indebted- the passing of his wife and the loss o0f her added income.
After losing his wife and the income she contributed, Mr. L was unable to support his expenses and was placed on debt review to rectify the detrimental financial situation. Below is a table that sets out Mr. L’s income and expenses.
‘The asset saver fell upon hard financial times when a change in circumstance lead to him being unable to cover his monthly expenses, and thus became over-indebted.’
|Wages (1st Party)||R13,000|
|Pension (1st Party)||R3,000|
|Food & Household goods||R3,000|
|Available for debt repayment:||R6,000|
‘Mr. L could not afford monthly debt repayments, on top of essential expenses as the available money was much less than the amount needed for monthly installments.’
As you can see from the table above, Mr. L’s expenses come to R10,000. As the total household income is R16,000, he was left with R6,000 for debt repayment after all basic expenses had been taken care of.
The below table sets out what Mr. L owed towards his debt amount, on a monthly basis, before entering the debt review process.
|Call Direct- Direct Axis||32.00%||R1,153.92|
|FNB Gold Cheque Account||9.00%||R4,287.24|
|FNB Pers. Loan||18.00%||R573.92|
|FNB Pers. Loan||20.00%||R1,154.23|
|FNB Smart Spend||32.10%||R942.66|
|SA Home Loans||9.70%||R4,927.50|
|Std Bank- Inst. Sale||13.50%||R1,764.20|
|WesBank- Personal Loan||31.00%||R1,298.27|
‘Entering debt review with National Debt Advisors was the best decision Mr. L could have made in his tense position.’
As we take what Mr. L earns and compare it to the R13,591.13 he owed on a month to month basis, a worrying picture emerges about his and his family’s financial security. Clearly, paying off the debt amount on top of the monthly expenses was not possible, pushing him further into debt with every passing month. This is why entering debt review with National Debt Advisors was the best decision Mr. L could have made in his tense position.
Below is a representation of the newly structured payment plan with creditors, after National Debt Advisors got involved.
|Call Direct- Direct Axis||20%||R856.25|
|SA Home Loans||9.70%||R3202.90|
|Std Bank- Inst. Sale||9.09%||R1,090.45|
|Amount saved monthly:||R26.75|
NOTE: Some of the accounts have been left out of the second table as Mr. L was able to settle them before the court level agreement and full debt review process took place.
‘This debt solution would protect Mr. L from legal consequences for non-payment, letting him take care of his basic costs without worry’
The above table looks a lot more realistic for Mr. L- while not increasing saving dramatically, it is ensuring he is not over-indebted as he was before. It shows the new low interest rates and instalments that Mr. L’s debt counsellor at National Debt Advisors arranged with creditors. As a result, he is able to afford monthly expenses and debt repayments without worrying about being left in the negative.
Moreover, NDA also arranged for the interest rates to be reduced, which means he will save a lot of money on interest too. Better yet, he won’t have to stress about law suits or car repossession due to non-payment of debts. The perfect helping hand for regaining control of his finances.
Check out our other case studies to read about how NDA has helped more clients achieve financial freedom.