It’s been a while since the news broke that the first corona virus case had hit South African shores. The recent pandemic has affected global markets and businesses, put a strain on healthcare systems and affected the livelihood of millions.

Many have praised South African president, Cyril Ramaphosa, for introducing a 21-day lockdown in the early phases of the virus development. The BBC went as far as calling the move “ruthlessly efficient“. A lockdown of this nature and length is a bold move in a country such as South Africa who already has a dangerously high unemployment rate and millions living below the breadline.

For over-indebted consumers who were already under debt counselling, or those who were thinking about applying, you may be wondering how the lockdown impacts this process.

What is Debt Counselling?

Debt counselling is a rehabilitation process that was introduced by the National Credit Act in 2007 to assist over-indebted consumers. The debt counselling industry is governed by the National Credit Regulator and the service is provided by debt counsellors.

The debt counsellor formally negotiates with a consumer’s credit providers to reduce monthly installments by extending the term, and reducing interest rates to try and save the consumer money.

Do I have to pay my debt counselling installments during the lockdown?

By in large, your debt counselling process remains unchanged. You will have to make your monthly payments in March and April as per normal. Your credit providers will still be expecting their portions.

Your debt counsellor has come to a payment agreement with your credit providers. The payment plan needs to be adhered to just as a normal credit agreement would need to be. Only if there has been a change in your income circumstance will the creditors consider an alteration to the payment plan.

What if I have lost all or part of my income for the lockdown?

If you have had to take a pay-cut or are not getting paid due to the virus, here’s what you need to do.

  1. Reach out to your debt counsellor as soon as possible.
  2. Provide your debt counsellor with proof of loss of income by emailing them the reduced payslip, bank statements showing reduced income or letter/email from HR/management detailing the loss of income.
  3. Your debt counsellor, using this proof, will email your credit providers a form 17.3. This indicates that there has been a change in circumstance.

Your creditors will now be aware that they will be receiving partial or no payment for those particular months.

What if I have been retrenched?

If you have been retrenched due to the lockdown here are some steps you need to take.

  1. Let your debt counsellor know that you have been retrenched.
  2. Ask your debt counsellor which of your accounts had credit life insurance attached.
  3. Contact those credit providers and send them the proof of retrenchment.

Credit life insurance policies may cover your monthly repayments for a certain period of time should you be retrenched. Different policies have different terms and conditions, so these will need to be explored on an individual basis.

Finally, try to be calm and rational and plan for the next few weeks…

Although all of the information, news, predictions and world reactions may seem overwhelming. Try to remain calm and not take on too much extra stress or anxiety.

Create a weekly budget and make sure all of your basics are covered. By food and provisions that can last a bit longer and try limit the amount of shop visits.

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An experienced consultant will contact you to understand your financial situation. We can then recommend the best options to get you out of debt quickly and affordably. In addition, you will get a free credit report & financial health report.