Unfortunately, retrenchments are becoming increasingly common, making effective retrenchment debt management crucial for maintaining financial stability. Having a well-devised plan of action is your best chance for financial survival during this challenging time.
Here are five things you can do to take control of debt after retrenchment
A budget is vital, especially after retrenchment. Start by listing all your essential living expenses and allocate funds accordingly. Review your bank statements to categorize your spending and identify any non-essential expenses that can be canceled or reduced. This will help alleviate financial pressure during this period.
If you’ve been contributing to UIF, you are entitled to claim unemployment benefits following retrenchment.
Ensure you have the necessary documents:
Visit your nearest Department of Labour office to process your claim.
Debt payments will continue to be due after retrenchment. Check if you have credit life insurance that might cover loan payments for up to six months in the event of retrenchment. Contact your credit providers to review your policy and understand the terms.
Consider reaching out to Debt Review Centre for information on a Payment Postponement application. According to the National Credit Act, a Debt Counsellor can propose to the Magistrate’s Court to postpone payment dates on credit agreements, offering temporary relief from debt obligations.
Consulting a financial planner is crucial after retrenchment. If you have a provident fund, a financial advisor can help you decide how to best utilize or invest these funds. They can also assist in evaluating whether to cancel or suspend any existing insurance policies for additional financial relief.
Retrenchment can significantly impact your financial priorities and stability. Credit providers typically allow a two-month grace period to update payments. Failure to comply may lead to a Section 129 Notice, followed by legal action. To avoid this, applying for a “Debt Freeze” under Section 86(7)(c)(ii)(cc) of the National Credit Act can provide temporary relief by freezing interest and fees while you seek new employment. You can apply for Debt Freeze by filling in the form bellow.
If you secure new employment but remain over-indebted, a Debt Review application can help restructure your debt repayments into a new plan, including any arrears. For more assistance with retrenchment debt management, please contact Debt Review Centre at 041 365 4139.
