How do I eradicate debt, accumulated as a result of job loss?

A South African consumer approached DebtBusters for advice on how to eradicate debt accumulated due to job loss:

My husband and I both had good jobs and we have always been able to afford our expenses. Due to the recession and the poor economic circumstances in South Africa, my husband was retrenched and lost his job.

This had a significant impact on our family’s’ finances as we no longer had a second income. I am now finding it extremely difficult to manage our expenses based on my income only.

Our house and cars are extremely important to us and I am very concerned that if we do not do something soon about our current debt situation, they will be taken away from us and we will lose everything.

Our finances are so minimal and we do not have money for food, petrol and other essentials, which are vital for our everyday living. I do not know what to do anymore and would like to know what can be done to help us eradicate our debt?

DebtBusters advises the following:

Debt is something that is currently affecting many South Africans and their households due to numerous factors, such as job loss. When someone loses a job, it is vital that you take the following factors into consideration:

A redundancy package:

When you lose your job, a redundancy package should be given to you. However, this may depend on how long you have worked at the company for. It is essential that you find out how much you will be granted and when you will be able to receive the money, if possible.

Notify your credit providers:

As soon as you lose your source of income, it is advised that you automatically notify your credit providers. For many credit agreements, you are charged an additional fee for Credit Life Insurance. Credit Life Insurance will cover you in the event of death, redundancy and disability and thus, will pay for your debts for a certain period of time. If the credit provider refuses to pay out, ask them to provide it to you in writing.

Submit an application to the Unemployment Insurance Fund:

This will ensure that you are paid a portion of your salary for up to six months. This will give you some time to find another means of income.

Draw up a new budget:

Create a new budget and determine what your expenses are and where you can cut costs or entirely eliminate costs. This will allow you to stretch your money so that it lasts for a longer period of time.

Pension Fund:

If you have a pension, you are allowed to take this out after redundancy. Make sure that you seek professional help from a reputable and certified financial planner, in order to familiarise yourself with the risks attached. It is not advised that you take money out of your pension fund before you retire, however sometimes it can be okay to take out a small portion of money.

Get in touch with debt counsellors 

In this situation, it is not uncommon for debts to start piling up. Debt counselling is a viable option for your financial situation considering you need to find a way to take back control.

DebtBusters, South Africa’s leading and largest debt Management Company, will negotiate your interest rates on your debts for you. Home-loans and vehicles are incorporated in the debt counselling process.

DebtBusters will be able to ensure that debt repayments on these assets are reduced, thus making it possible for you to keep them.