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South Africans urged to consider debt counselling as jobs bloodbath looms


Many households facing financial hardship as a result of the Covid-19 lockdown of the economy

ECONOMISTS have predicted a jobs bloodbath of over seven million in the country which will push many into debt, degrading their credit profiles.

Small and medium-sized businesses would also struggle to get back on their feet, while banks would find it hard to grant loans due to junk status.

Benay Sager, chief operating officer at DebtBusters, a debt counselling company, has encouraged consumers to consider debt counselling ahead of “tough times”.

He said a survey had shown that many households were facing financial hardship as a result of the Covid-19 lockdown of the economy.

Sager revealed that many consumers who were struggling to make ends meet were often reluctant to seek help, either because they didn’t know where to turn to or because they were embarrassed.

“The lockdown probably forced many consumers to assess their financial situation. Some will have realised how much difficulty they are in, but they might be reluctant to seek help either because they don’t know where to turn or are embarrassed.

“People in this situation should understand they’re not alone. There are options and they need to act before they face the possibility of their house, cars or other assets being repossessed.

“Debt counselling is one of these options. South Africa is fortunate to have a debt counselling sector that is considered world-class. It is highly regulated, efficient and effective,” Sager said.

He added that debt counsellors were able to negotiate with all creditors on consumers’ behalf to reduce monthly payments on all credit agreements falling under the National Credit Act.

Economists have also encouraged consumers “to do everything” in their control to keep their financial affairs in order through this difficult time and the uncertainty it brings.

Dhashni Naidoo, FNB consumer education manager, said it was difficult to predict how long it would take for the situation to stabilise, or its knock-on effect on the economy.

“The idea is to adopt a disciplined way of managing your money and seek financial relief where necessary and possible. Don’t cancel your insurance or take up unnecessary debt,” he said.

The National Credit Regulator (NCR) has advised consumers to consider making use of their credit life insurance benefits during this difficult period. Credit life insurance covers debt in the event of unforeseen circumstances such as death, retrenchment, unemployment, inability to earn an income and disability.

NCR chief executive Nomsa Motshegare said many consumers may not be aware that they had credit life insurance in place and that the premium for this insurance was already included in the cost of credit.

“To check if this insurance is in place, consumers must contact their credit providers, and where applicable consider the use of this benefit to provide relief.

Credit life insurance cover provided that credit providers should settle/pay the consumer’s debt for 12 months, or the remaining repayment period, or until the consumer found employment or could earn an income, whichever period was shorter, said Motshegare.

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