What to Do If You Cannot Pay Credit Card Debt in South Africa?

Having a Credit Card means having freedom. However, irresponsible use of a Credit Card can usually result in a large debt that people may not be able to afford to pay. Of course, there are other reasons too, such as the rising cost of living and economic uncertainty. Such situations can also create predicaments. If you are wondering what to do if you cannot pay Credit Card debt in South Africa, this guide offers practical steps to mitigate the situation and regain control of your finances.

Unpaid credit card installments can result in future credit being declined

Understanding the Consequences of Unpaid Credit Debt

In South Africa, missing your Credit Card payments can have significant financial and legal consequences. If you skip a payment, your Credit Provider may charge late fees and interest. Late payments also affect your Credit Score, but the impact is often negligible as long as you manage it within 20 business days. We strongly advise not delaying further payments to avoid further hits on your credit score.

If you still fail to pay your credit arrears within 20 days, your Credit Provider may report the default to Credit Bureaus. Such incidents can negatively impact your Credit Score. Remember, a negative impact on your Credit Score can last for years.

Nonetheless, continued failure to pay your debts could lead to collection action (Section 129: Letter of Demand), court summons, or even a judgment against you. Once a judgement is taken, Credit Providers can then proceed with Writs of Execution against assets and Emolument attachments against income. Whether you work for an employer or are self employed. When legal action reaches this point  Sequestration may be your only option.

We have talked about this in more detail in our previous article: https://www.solvendi.co.za/post/cannot-pay-your-credit-card-debt

So, what should you do if you cannot pay your Credit Card debt in South Africa?

Acknowledge the Problem

The worst thing you can do is ignore your Credit Card debt. The faster you acknowledge the situation, the better you can manage it.

Act immediately, if you know you’re going to miss a payment or can no longer afford the monthly installment.

The first thing you should do is contact your Credit Provider

Feeling like you are going to miss repaying your credit debt? It’s time to contact your Credit Provider. 

Reach out to them to explain your financial situation. As long as you have an excellent credit standing and a clean credit history, the negotiations should go your way. In many cases, they may offer the following.

• A temporary payment holiday

• Lower interest rates

• A longer repayment term

• Debt restructuring options

  
  

It is in the lender’s best interest to recover the money, so they are usually willing to negotiate terms. In this phase, transparency from your end matters the most.

Be honest, keep records of all communication, and respond to letters or phone calls promptly.

Contact your credit provider if you are unable to pay your credit card installment on time

Not all Credit Providers are willing to negotiate; it is time to explore Debt Counselling

If your credit debt has become unmanageable, or if the Credit provider is unwilling to negotiate, consider applying for debt review through a registered Debt Counsellor. This process, regulated by the National Credit Act, protects you from legal action and restructures your debts into one affordable monthly payment.

With a Debt Review, you receive legal protection from legal actions against you. Furthermore, this process adjusts your monthly debt repayment to match your income and living expenses.

And most importantly, your assets are legally protected, thus your Credit Providers cannot repossess them. However, the catch is that it is vital to adhere to the clauses once the payment agreement is in effect. Violation of your agreement can result in legal action against you.

We recommend contacting a reputable registered Debt Counselling company like Negociate Credit Solutions for more information on Debt Counselling.

Once Your Debt Review is Complete, Prioritise Essentials and Re-evaluate Your Budget

Now, this should go without saying, but consider cutting non-essential spending and prioritising necessities like food, housing, and utilities. Use your savings to make partial payments if possible. Sticking to a strict budget is key to overcoming Credit Card debt over time.

Debt Relief via Sequestration and Credit Rehabilitation

If your debt is completely unmanageable, you may be liable for Sequestration in South Africa. If your unmanageable debt exceeds R 150,000 and you have exhausted all the options to manage it, Sequestration may be the relief you are looking for.

For more information on sequestration, click the link. Solvendi can help you with Sequestration by taking the Credit Providers/Attorneys/Collection Agencies off your back, providing you with relief from pressure and all the stress and anxiety that comes with it.

Sequestration is your final option when all the other options fail. Regardless, Sequestration is not the end, even though it heavily impacts your Credit Score. It gives you the opportunity to write off 75% of your debt which is a huge relief when you consider the alternative. Namely, debt growing due to interest charges and legal fees with no end in sight of ever breaking free from the overwhelming burden of your debt.

You can get you back on track with the Credit Rehabilitation process so that you can become a part of the South African economy once again. This occurs about 4 years after the Sequestration Order is granted. If you do not apply for Credit Rehabilitation after 4 years then your Sequestration Notice is automatically removed from your Credit Report and name after 10 years by law.

Utilise the options you have available when you cannot pay your Credit Card Installment

Conclusion

If you are wondering what to do if you cannot pay credit card debt in South Africa, the most crucial step is to take action immediately. Ignoring the problem only makes it worse. Contact your creditor, consider professional debt counselling, and cut down on unnecessary expenses. If you are in a pinch, consider contacting us for a professional assessment. You do not have to face your credit debt crisis alone.

For more information on how you can get out of an unmanageable debt situation, you can contact us for Credit Assessment, professional Debt Counselling, and insolvency-related consultation.

Considering Voluntary Sequestration? We have legal experts with 20 years experience that can guide you through the process. Our main aim is to be as informative as possible. Let's Chat.

If you require advice with regards to Sequestration, Voluntary Surrender, Business Liquidations, Insolvency, Bankruptcy or Credit Rehabilitation kindly contact SOLVENDI as follows:

National: 087 220 0710

Head Office: 010 880 7589

Email: consultations@solvendi.co.za 

Website: www.solvendi.co.za