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The Latest Debtfree DIGI

Monday, May 31, 2010

Don't be stupid

Many people struggle with their finances for a long time before approaching a debt counsellor. Then after entering the debt review process they have a great feeling of relief. Their assets are protected and life is good.

However years of bad financial decision making is hard to put behind oneself even with the help of a Debt Counsellor working out a monthly budget that will allow for the consumer to make the required payments to their creditors all year round.

And so it is that Debt Counsellors sometimes look on in horror at the plain stupidity of decisions that their clients make.

It normally manifests itself in the client not paying the full amount that has been arranged/negotiated and submitted to the courts. The Debt Counsellor now sends an email or makes a call to ask if everything is alright.

Here is where the "stupidity" manifests itself.
Debt Counsellors here stories like:

Well, i had to throw my daughter a BIG 21 birthday party and we had to hire a pony...
Well, i decided to do a course through UNISA/Damelin
Well, i don't want to pay toward my debt with X creditor anymore
My house was looking really bad so i hired a company to come in and paint it

Now why do we call it "stupidity"?

Well, imagine if painting the house is what causes the creditor for the home loan to withdraw from the process and have the house auctioned of leaving hundreds of thousands of rands debt in shortfall. Maybe the consumer could have saved up for a few months and then painted the house themselves. Maybe they could have arranged a cake sale or garage sale to help come up with the funds to buy the paint.

A missed or reduced payment is not part of the agreement or the court order thus by paying (or not paying) this way the consumer has broken the agreement. Now while sometimes there are very legitimate reasons for short payments (such as medical emergencies or income issues) the DC has normally sat with the client and discussed up coming costs and helped the clients plan for the months ahead in their budget. Thus there should be no surprises.

Clients often know that they are being "silly" - that is why they do not call the DC in advance and discuss their plans to "head off to visit my family for a break" which will cause them to miss a payment.

However the DC's job is to help people make a plan..if the consumer does not wish to stick to the court order afterward (even though they said they would) well...that is the consumers decision. Debt counselling is not a process that takes all responsibility away from the consumer. Nor does it help consumers abuse or take advantage of creditors rather it presents workable plans for both sides of the debt equation. However it would be a great pity where a consumer to find themselves back in financial straits over a "stupid" choice.




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