Debt review can be a life-changing process for South Africans struggling to navigate their debt by themselves.
However, life has many twists and turns that can hinder your commitment or ability to meet debt repayments. A great example of this has been the Covid-19 pandemic, which has had a significant impact on job security across the country.
In this blog, we are going to address any concerns about missing repayments and share what options you have if you were suddenly unable to pay your monthly debt installments.
Keep reading to find out more!
Depending on the frequency or amount, you may be subject to legal action from your creditors and even have your debt review court order completely terminated if you can’t pay your debt review repayment or miss your monthly debt instalment. In some instances, additional legal fees may also be included.
When it comes to suddenly being unable to meet your financial commitments under debt review, it is essential to maintain consistent and transparent communication with your debt counsellor throughout the process.
The last thing you want to happen is to be issued with a Section 129 letter from your creditors, be summoned to court without the assistance of your registered credit counsellor and have your valuable assets repossessed by the state to pay off your debt.
Keep in mind that you do have options, and that there are several things that you can do if you’re at risk of missing a debt repayment. We’ll take a look at these options in a moment. Let’s first discuss losing your job while under debt review.
In the unfortunate case that you lose your job while under debt review, do not panic.
First, contact your debt counsellor as soon as possible to let them know that your financial circumstances have changed – they will be the one communicating with creditors on your behalf and can legally renegotiate your repayment terms with the court.
Take note that you will have to provide your debt counsellor with substantial proof that you are now without employment and are unable to afford your monthly debt repayments. The main piece of evidence to supply your debt counsellor is the letter of termination you received from your employer.
Here is some good news: the National Credit Regulator (NCR) allows for a 30-day temporary hold on your debt review if you meet all the requirements proving you are unable to meet installment deadlines. This can buy you some time to look for alternative employment and any other necessary financial assistance.
As previously mentioned, contact your debt counsellor immediately. You may feel embarrassed about the situation at first, but there is no need to feel shameful about getting on top of your debt and wanting to achieve complete debt freedom in your life.
The most important thing to do is to not stop paying your repayments altogether. If you instantly halt repayments, you run the risk of having your debt review contract cancelled and open the door for creditors to take legal action – one of the benefits of debt review is that it saves you from interacting with potentially aggressive creditors.
Remember, it is better to pay something, rather than nothing. This will show your determination and commitment to repaying your debt, which will work in your favour when your debt counsellor is negotiating with the court for additional repayment time and lower repayment fees.
Another option to consider is claiming from your credit life insurance if you have. In a nutshell, credit life insurance is insurance cover taken by a consumer taking credit and covers debts such as mortgages, personal loans and/or or credit cards.
In the case of retrenchment, disability, death or disease, credit life insurance will be able to help you cover your debt obligations for a certain period of time. For example, if you have been temporarily retrenched, your credit life insurance can cover your debt review installments for up to 6 months.
In the journey to attaining financial freedom and living a debt-free life, having a solid plan, secure and structured approach is crucial. We hope this blog provides you with valuable insight into what could happen if you miss a debt review repayment and what options are available to you if it were to happen to you.
Find out if you’re eligible to reduce your debt and protect your belongings.
Disclaimer: This website and any information herein is not intended to be, nor does it constitute, financial, tax, legal, investment, credit, or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified professional directly.