What happens if I lose my job while under debt review?

by | May 23, 2022 | Personal Finance

Losing your job can be very stressful. It is even more devastating if the job loss was unexpected and not due to your own faults. Due to Covid 19, job losses have been the sudden reality of millions of people all over the world. Stats SA reported that in the last quarter of 2021 alone, more than half a million people lost their jobs. The report states that a total of 671 000 people in the formal sector lost their jobs during that period, bringing the country’s unemployment rate to the highest official unemployment rate recorded since the start of the Quarterly Labour Force Survey (QLFS) in 2008, at 34.9%. So, if you have recently been retrenched, you are not alone, and there are some plausible solutions to the financial turmoil that you find yourself in.

So, what happens if you lose your job while under debt review. The sad fact is, in order to survive, most people simply decide to just stop paying their monthly installments. This is the worst mistake they can make!

If you lose your job while under debt review the first thing you should do is contact your debt counsellor and let them know.  Your debt counsellor will contact your creditors and ask for a grace period or renegotiation of your payment terms to help you manage loss of income. You will be required to provide supporting documents that can be submitted to creditors. If you are in compliance with all National Credit Regulator (NCR) requirements, the regulator allows for a 30-day temporary hold on your account. Also, most creditors will allow for a grace period of up to three months while you try and find another job.

National Debt Advisors (NDA), also provides credit life insurance for all our debt review clients. This helps cover your debt repayments while you are laid off. If you are up to date with your debt review payments and the required waiting period is up, you may request that our insurer activates your coverage immediately. This can help with paying your debts for a period of up to 12 months while you are unemployed. Note that, if six months have passed and you are still unemployed, you would need to provide your credit life insurer with an Affidavit stating that you are still unemployed for payments to continue for the remaining six months.

Like any other relationship, your debt management relationship with your debt counsellor works best if you maintain open communication lines. Reach out to your debt counsellor at any point when your circumstances change. Our debt counselors may use one of the remedies in the National Credit Act to delay payments, giving you time to reduce your payments while you find an alternative job.

It is important to note that when you are unemployed, you cannot start a new application to be placed under debt review, however if you are already under debt review and you lose your job, you are still able to continue with the debt review process. Also, credit life insurance does not cover job losses that are due to resignations, dismissals, retirements, absconding, an end of contract, or any other circumstances that were due to any fault of your own. Credit life insurance only covers instances such as disability, critical illness, retrenchment, loss of income, and death.

Contact NDA today and find out about the various options we have to help you through this tough period.

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