Understanding over-indebtedness
A consumer is over-indebted if the gravity of available information at the time a determination is made indicates that the particular consumer is or will be unable to satisfy in a timely manner all the obligations under all the credit agreements to which the consumer is a party, having regard to the;
a) financial means, prospectus and obligations; and
b) probable propensity to satisfy in a timely manner all the obligations under all the credit agreements to which a consumer is a party, as indicated by the history of debt repayment of the consumer.
Over-indebtedness on a general perspective pushes consumers into poverty, accompanied by the material, psychological and sociological consequences of debt.
SIGNS OF OVER-INDEBTEDNESS
The signs of over-indebtedness often reflect the following aspects:
a) Making high repayments relative to income;
b) Being in arrears
c) Continuous borrowing
d) When debt becomes a burden.
WHAT CAUSES OVER-INDEBTEDNESS?
There are several causes of over-indebtedness and amongst them are;
a) Failure by the borrower to understand the terms and conditions of the loan before signing the credit agreement.
b) Failure by the borrower to assess his/her capacity to repay the loan;
c) Taking more than one loan at a time.
d) Borrowing from several credit providers and other sources.
e) Non-disclosure of extent of indebtedness to other financial services providers to enable the lender to assess capacity to repay.
Consumers of non-bank financial services providers are advised to desist from the practices noted above which lead to over indebtedness.