BEWARE: If your car or house is repo'd, you can still end up owing money to the bank

Consumer ninja Wendy Knowler joins Stephen Grootes on The Money Show.

It's a nightmare scenario: You lose a major asset like your house or car because you can't afford to keep up the payments on your bank loan.

But it can get even worse in the event that your house for instance gets repossessed and you still end up owing money, and that debt is earning interest.

Consumer ninja has advice on avoiding this kind of dilemma as she discusses a case study of a woman who actually went through it.

It's actually a regular thing says Knowler, when there's a shortfall between what the bank gets for the asset and the amount of money you still owe them.

In the case of Nazereen, this home buyer started coming unstuck two years after her 2007 purchase of a house for R350 000, almost R300 000 of which was financed by FNB.

In a nutshell, the property was finally sold for R180 000 via FNB’s Quicksell programme in October 2011, and Nazereem was left with R263 000 debt and handed over by the bank to a debt collecting firm.

This meant she couldn't get on with her life because of that debt damaging her credit record.

Knowler took up the case despite the dire nature of the situation, asking if FNB could see its way clear to finding a way of making it possible for Nazereen to move on and clear that adverse listing.

Keen to help the client settle the matter, the bank offered a 70% discount on the initial shortfall amount at the time of sale.

That worked out to about R80K, says the consumer journo.

"A great offer, but there’s a problem. The small business Nazereen started last year is barely operating, and she can’t take out a loan because - well, of that 'blacklisting'."

Wendy Knowler, Consumer Journalist

Knowler returned to FNB to ask if there was a possibility of Nazerem paying off this amount, and they agreed.

Her advice to consumers firstly, is DON’T over-commit.

"Then, don’t be in denial about your inability to meet your repayments... consider your options such as debt review BEFORE the bank takes legal action against you."

Wendy Knowler, Consumer Journalist

"And if your asset is repo'd, remember you WILL need to make a plan to pay that shortfall."

Wendy Knowler, Consumer Journalist

For more detail, listen to the interview audio at the top of the article