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Article: Janine Finnemore from DebtSafe
Like Demi Moore, David Duchovny and the two good looking teenagers the cast in the movie The Joneses, we’ve all been faced with a feeling of "I wish I could have/afford/use/drive/live what so-and-so is/does".
The reality is, however, many people make these financial decisions and end up putting themselves in a situation that causes way more stress than is necessary – especially when they face repaying limitless amounts of admin fees and interest on top of the loaned amount. But there are laws in place to protect the consumers from having to keep repaying these amounts. Enter the "In Duplum rule".
What the “In Duplum rule” does is protects consumers and essentially caps the interest figure once it reaches the same amount as the actual money that is owed.
Say, for instance, you have purchased that XXXXX for R5,000.00 on credit, and for whatever curve ball life has thrown at you, you miss payments which in turn pushes the interest owing through the roof. Once that interest figure reaches R5,000.00, the "In Duplum rule" comes into effect. You will then only need to pay back the original loan amount plus the capped interest (in this hypothetical example, R5,000), relative charges or fees.
The rule is available to all consumers in default of a credit agreement. So if you haven’t paid the amount you legally said you would, you run the risk that the credit provider either enforces the agreement or places you on terms to cure the default.
“Credit agreements will mostly contain a clause in which the full outstanding amount becomes due and payable immediately in the event of non-payment," says Du Plessis. "Once a re-arrangement order that is obtained through a debt review court order has been arranged, the non-payment will continue to exist, but the credit provider cannot enforce the agreement as long as payments are made in terms of the debt review court order."
The "In Duplum rule" is a great mechanism to limit repayments on very expensive short term loans with high interest rates such as personal loans, credit cards etc. This would also benefit the home owner in that, depending on the circumstances, a consumer could potentially be out of debt three to four years earlier than initially planned.
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For more practical guides on managing your debt, head over the DebtSafe.co.za.