Determination of Available Income

Review of Spending Patterns Once the income of the consumer has been determined it is time to review spending items that can be reduced. The purpose of this process is to make sure that a sustainable budget has been created for the consumer. This means the inclusion of required expenditure and the reduction or elimination of luxury expenses. This will require the consumer to implement certain sacrifices to make sure that the budget of the consumer is realistic, sustainable and defendable in a Magistrate Court. It is important to note that the Debt Counsellor is fulfilling a statutory obligation and for this reason care should be taken to make sure that the Debt Counsellor has applied his or her mind to the financial assessment of the consumer’s financial position. Debt Counsellors could be requested by a Court to substantiate the Affordability Assessment and the determination of the amount available for debt repayment. Debt Counsellors should be able to explain and defend their financial assessment. It is however important to note that the spending patterns of consumers will in most cases be different. The reason for this is that consumers have different needs and requirements. For instance some consumers will spend more on the education of their children but will spend less on food. Others might decide to spend money on their DSTV but decrease spending on a different item. What is important to Debt Counsellors is to make sure that overall expenditure is reasonable and defendable. Many Credit Providers and Magistrates will have different interpretations of individual items. For instance some might argue that smoking should be stopped while others might consider even reasonable telephone expenditure as unreasonable. In the final analysis, the proposed budget can only be constructed if all expenditure is assessed and the final outcome is reasonable. To assist Debt Counsellors the following guidelines should be used in the analysis of required non-required and luxurious expenditure. 7. Identifying Various Expenses as Required, Non-Required and Luxurious, and how to deal with each of these categories