Can’t Pay Your Debts? A Step-by-Step Plan for the First Week

Falling behind is common, and it is rarely a sign of bad character. What matters is what you do next when you can’t pay your debts.

This is a week-one plan for when you can’t pay your debts. You can follow it today, in order, without paying anyone.

What should you do first when you can’t pay your debts?

Start with facts, not fear. Steps 1 to 3 below take about an hour and tell you exactly how big the problem is.

Step 1: What do you owe?

Write every debt on one page: who, the balance, the monthly payment, the due date, and whether it is secured by an asset, such as a car or house.

Pull your credit report to find debts you forgot. See free credit reports.

Step 2: What must you protect first?

Not all debts are equal. A rough order:

Do not pay a lower-priority debt by skipping rent or food. It rarely ends well.

Step 3: How much can you really pay?

Add up your income. Subtract essentials. What is left is what you can offer creditors. Be realistic.

Our guide to how to budget helps with the numbers. Here is a hypothetical example.

If your debts total R3,400 a month, you are R1,100 short. That is the number to bring to your creditors and a counsellor.

Step 4: Who should you contact?

Everyone you owe, starting with the most urgent. Contact them in writing:

• Explain your situation briefly and honestly.
• Offer a specific amount you can pay each month.
• Ask them to confirm in writing.
• Keep copies.

Many creditors prefer a small regular payment to none.

Step 5: What if you can’t pay your debts even with a plan?

Consider help:

• Debt review. An NCR-registered debt counsellor negotiates with creditors and arranges one reduced payment. See debt review.
• Free advice. Legal Aid South Africa, law clinics and non-profit budget advisers.
• Smaller debts. See administration orders.

What should you avoid?

• Payday loans or new credit to pay old debts. See payday loans under debt review for why new credit is blocked once you enter review.
• Ignoring letters. Silence makes things worse.
• Companies that charge upfront to “fix” your debts.
• Handing your bank card or PIN to anyone.

What if a creditor takes legal action?

Read every document and respond within the deadlines. See section 129 notices, judgment debt and garnishee orders.

What if collectors call?

You have rights. See debt collectors. Ask for proof in writing and do not agree to anything on the phone.

How do you prevent it happening again?

Build a small buffer, even R100 a month. Track spending. Avoid borrowing for recurring costs. See emergency fund and responsible lending.

What does a debt list look like when you can’t pay your debts?

A single page makes the problem smaller. Here is a hypothetical list that adds up to the R3,400 a month in the example above.

Add two columns when you can: the interest rate, and if you are already in arrears. The list takes an hour, and it changes the question from “I owe everyone” to “I owe R65,700, and I can pay R2,300 a month”.

How do you split R2,300 across creditors?

You have two sensible ways, and each has a place.

The pro rata method treats everyone fairly. The secured-first method protects the car, which you probably need for work, and then shares the remainder. Either way, offer each creditor an amount in writing and ask them to confirm.

Creditors are more likely to agree when you explain that you are paying everyone something every month.

If the amounts do not add up to enough for any of the creditors to agree, that is the signal to talk to a debt counsellor about debt review.

What does your first week look like when you can’t pay your debts?

Plans are easier to follow when they have dates. Here is a simple calendar.

Do not skip day 7. A weekly review stops problems from growing unseen.

What if your income has just dropped?

A job loss or a sudden drop in income changes everything quickly. Do three things at once:

1. Apply for UIF if you lost your job. See claiming UIF.
2. Rewrite your budget with the new income, and tell creditors the date it changed.
3. Ask each creditor for a short pause or a smaller payment, with a date to review.

Money stress is heavy. Talk to someone you trust, or a counsellor, about how you are coping as well as the numbers. You are more likely to make good decisions when you are not facing it alone.

What should you remember when you can’t pay your debts?

The hardest part of the first week is not the arithmetic. It is the belief that nothing can be done.

When you can’t pay your debts, three facts help: creditors usually prefer a small regular payment to a court case, the law gives you a process before most enforcement, and free help exists.

If you can’t pay your debts this month, that does not mean you can’t pay them ever. A written plan, honest numbers and one or two phone calls can turn an open-ended worry into a list of tasks with dates.

Frequently asked questions