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Don’t ignore your credit providers

Mar 8, 2021

The Credit Ombud wants to remind consumers that there are ways to ease the woes that come with being unemployed while having debt, and you shouldn’t just ignore your credit providers.

Don’t ignore your credit providersIf you’ve just lost your job or have had your salary reduced due to the Covid-19 lockdown, it’s understandable that you are anxious and find it difficult to figure out which of your financial commitments should be at the top of your list.

Ignoring your debts, and avoiding your credit providers only makes matters worse. So speak up!

Communication creates a healthy relationship between you and your credit providers. Due to the pandemic, credit providers have introduced some relief measures for consumers and once you contact them, they will advise on the available measures that would suit your needs.

Here are a few measures to take into consideration:

Credit life insurance: If you have credit life insurance, and prior to your current situation you were paying your accounts timeously and you kept to your monthly payments, then the insurance provider should step in to assist you. Credit life insurance provides security for when you are unable to pay your debts due to retrenchment, disability, or death.

Surrender of goods: Do not wait for your credit grantor to take legal action and start with the collection process before you approach them about this option. When considering surrender of the goods, make sure that you understand that if the goods are sold at an amount that is less than what you owe, you may still be liable for any shortfall payable.

Payment holiday: Many creditor providers provided a payment holiday to consumers at the beginning of the lockdown. A payment holiday may mean that you may not have to pay for certain months and this may give you a breather. Make sure, though, that you understand the conditions of the payment holiday. Note that Interest will continue to accrue, and your payment term will be extended to cover the months which you couldn’t make payment.

Debt review: If your salary was reduced, you may approach a debt counsellor who will negotiate with your credit providers for a lower installment. You need to be aware though that this will mean that your repayment term will be extended as the interest will accumulate. Importantly, you will not be able to take on further credit until you have paid up your debt and receive a clearance certificate. It will reflect on your credit report that you are under debt review.

Note that even if you make arrangements with your credit providers, they are still obligated to submit your account data to the credit bureaus, and your credit report may be negatively impacted.

Here’s an example of a case which the Credit Ombud has dealt with relating to Covid-19 relief:

Consumers can contact the office of the Credit Ombud for free assistance if they experience any issues relating to credit agreements with non-bank credit providers, such as clothing and furniture retailers as well as micro-lenders, fraudulent listings, emolument attachment orders (“garnishee orders”) or general complaints about their credit bureau listings.

A recent example of a case where the Credit Ombud was able to assist: A woman did not receive a salary for three months of the lockdown and was experiencing problems in getting her credit life insurance payout for these months. She escalated the matter to the Credit Ombud office, which liaised with the credit provider to have her request/application assessed. After the intervention, the credits relating to the credit life payouts were passed, and the matter was resolved.

The office of the Credit Ombud can be contacted on 0861 66 28 37, on the website, via email or send an SMS to 44786 and they will call you.

This article was based on a press release issued by the Credit Ombud, and first appeared in City Press.

2 Comments

  1. In my case, I lost my job about two years before lockdown… I tried to keep paying, but could only post lest than the required amount, but was still handed over to a collections agency.

    I then ignored the collections agencies, and it has exceeded two years since then.

    What would my options be? I assume after two years of not acknowledging debt, I may be free? But they still keep calling though.

    Reply
    • Prescription of debt means a debt is extinguished after a period of time has passed. According to the Prescription Act 68 of 1969, a debt is prescribed if, during the past three years the consumer did not;

      admit to owing on the debt, either verbally or in writing;
      make payment towards the outstanding amount;
      The lender has not taken legal action against the consumer

      In this case they could still take legal action – that could end up with a huge judgement bill. It may make more sense to try settle by making an offer to pay a lump sum as full and final settlement.
      David O’Brien mentions this at the end of the podcast https://mayaonmoney.co.za/2021/02/listen-pros-and-cons-of-debt-counselling/

      Reply

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Maya Fisher-French author of Money Questions Answered

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