increasing of balances instead of decreasing

 

I tried to contact you telephonically but with no success.

 

The reason why the outstanding balances are increasing and not decreasing is due to the fact that the monthly payment towards your creditors are less than the monthly interest charged by the creditor. According to all credit agreements, the interest is always paid first and then the capital amount. The balances will decrease once interest is paid in full.

 

The amount you pay is calculated according to your affordability and according to your budget. Please understand that we can only pay the creditors with money that you have made available. Please take note that interest is always payable and this cannot be stopped or reduced, the interest rate will stay the same as you agreed on in your original credit agreement.

 

I wish to explain to you how interest is dealt with in debt review. The creditor is entitled to the interest rate agreed to on the original credit agreement subject to the provisions of Section 103(5) of the Act. This section limits interest that a creditor may charge on an account. The total interest, charges and fees the creditor is entitled to may never exceed the balance on the date of first default.

 

I sent you an e-mail with the relevant proof thereof attached.

 

If you would like your debt to be paid off sooner then you will need to increase your monthly instalment in order to pay the interest as well as the capital balance. Please let us know if you are willing to increase your payments.

 

Kind Regards,

Roxanne de Klerk

Operational Manager