Times are tough, but keep your debt under control

While the whole world is going through a rough patch, you may also be feeling the pinch. With the country in crisis, it may be difficult to keep up with your debt instalments. However, abandoning your debt obligations is not the solution.

This article will help you manage your debt during a financial crisis.

Tip: If you’re overwhelmed by your debt. Apply for debt relief by clicking here.

1. Create a budget

The first step is to create a budget. This may be time to do away with some of your luxuries. Along with your necessities, your debt will have to take priority. Once you’ve allocated money to basic things like food, shift your focus to your debt and see which accounts you can afford to pay. You can prioritise your debt according to the level of interest each one bears, or their importance – for instance, your house or the car.

2. Stay in touch with your creditors

According to Carla Oberholzer, debt adviser at DebtSafe, you must stay in contact with your creditors and banks. Credit providers have different channels of communication. Choose the best one for you.

3. Take advantage of the payment holidays

Banks are offering payment holidays to everyone whose income is affected by the crisis. Many banks came up with debt relief plans to assist their clients. These plans include waiving administration fees, assistance with processing credit insurance claims, and preferential interest rates.

“We realise that this is a difficult time for our customers and businesses whose financial means are being negatively affected. After careful consideration and engagements with regulators, we are pleased to introduce a comprehensive customer, business and corporate relief programme,” says Daniel Mminele, Group Chief Executive of Absa, in a statement. 

READ MORE: How much should you spend on servicing your debt?

“If your cashflow has been impacted, we want to offer assistance which may include payment holidays and other restructuring alternatives.  We offer several options to clients, based on individual circumstances, rather than a one-size-fits-all. We encourage you to contact us to discuss your individual circumstances,” says Nedbank in a statement.

4. Apply for debt counselling

Oberholzer says if your negotiations with your creditors fall through, you can always count on debt counselling for rescue. 

“If you’ve tried everything, and you currently receive a form of income, you can ask for an assessment to see if you’ll qualify for debt review,” she says.

Current debt review clients have to honour the debt review process as it’s subject to a court order, and stay up to date with their monthly debt review repayments. Debt review clients can contact their debt counsellors directly if they have any concerns, says Oberholzer.

According to Oberholzer, no payment holiday applies to the debt review process as it’s governed by a court order. 

“South Africans have to stick to their monthly budgets. They should not overextend themselves and continue to honour their debt repayments,” she says.

“Consumers mustn’t make assumptions about payment holidays where there are none. Consumers have to continue to stay up to date with communications and contact their relevant debt counsellors (if the consumer is registered under debt review), banks or creditors to avoid any confusion or questions that they might have,” says Oberholzer. 

 If you lose your income, credit life insurance can ensure your debt is paid while you recover. To get a quote, click here and a consultant will get in touch with you.