MOST of us borrow money to improve our quality of life but how many of us can keep up with the repayments?
Debt has led many to the brink of destruction, to such an extent that some lose just about everything they own, including their dignity.
The lives of those trapped in unmanageable debt are under lot of stress and emotional pain.
Now what is debt? Debt simply means when you owe money to the bank or somebody.
Debt can be in the form of borrowing to purchase a house, to pay for education, to get married or to buy a car. When we borrow money or take a loan, it comes with interest and is part of the repayment.
When we default our payments, repayment amounts and the interest accumulate.
Interest is an extra charge or fee paid by a borrower for the use of money that they borrow from a lender.
Everyone faces financial challenges at some point in their lives yet we are not comfortable admitting our debt-dilemma.
This is one of the key reasons the Consumer Council of Fiji embarked on the setting up of its debt management and credit advisory service to assist Fijians with their financial struggles.
Our debt management and consumer credit advisory service is an integrated counselling service that empowers and assists consumers who are overwhelmed with debt.
Since the establishment of the council’s debt management and consumer advisory service in 2011, one of the key challenges faced is the “culture of silence” that exists among the consumers.
Many consumers who have accessed the debt management service at the council have displayed a deep sense of discomfort or embarrassment when it comes to discussing their financial crisis.
They have been hesitant to share how much they owe to their banks, moneylenders, neighbours, friends, credit union and family members and against what they earn. We have also found consumers who are hesitant to discuss why they took loans in the first place.
Consumers should not feel bad if they face financial difficulties. A home loan is for such a long period (20-30 years) that the ability to meet mortgage repayments is likely to change.
Some consumers have chosen to remain silent about their debt crisis until their lenders had put out their properties up for mortgagee sale.
There are consumers who think that if banks take their property then there is no more debt to pay. Unfortunately, that is not true. Banks will sell the property to recover their loan and any shortfall in the loan amount will be recovered from the consumer.
Lack of understanding of the implications of credit contracts, over-committing to credit suppliers, borrowing beyond their means, the inability to make repayments (perhaps because of changed circumstances) and little awareness of protections available under the Consumer Credit Act are some of the common problems faced by consumers.
Debt management is about one thing: consumers controlling and managing their money.
There is no magical or mystical formula to good debt management.
The solution is common sense, strong willpower not to go overboard, and having a management plan for the total money income and use.
After all, good debt management is 80 per cent behaviour and 20 per cent knowledge.
It’s amazing to see people change their lives through simple determination and having a plan that works for them.
Once consumers have a real debt management plan in place, it’s only a matter of time.
No debt problem is unsolvable. The essence is to know how to work through the problem to get back on track.
Sometimes just knowing where to turn for help makes all the difference. The debt management and consumer credit advisory service of the Consumer Council of Fiji is precisely there to assist.
But you have to take the first step. We can do nothing until you seek our assistance.
* This is a regular contribution from the Consumer Council of Fiji. Email: mediaofficer@consumersfiji.org for feedback.
