Guiding consumers since 2009

Be warned of the debt trap

By Staff Writer

According to data from Statistics South Africa, employment contracted by 1.3% or 171 000 jobs between the fourth quarter of 2009 and the first quarter of 2010. The year on year picture, shows that 833 000 jobs have been lost over the past year.

According to the National Credit Regulator's statistics, there are over 18 million credit active consumers, of these, 45% have impaired records. A consumer is classified as having an impaired record if he/she has three or more payments in arrears, or has an "adverse listing", or a record that reflects a judgment or an administration order.

To date in excess of 170 000 consumers have applied for debt counselling. The scenario therefore is set for employees to exercise extra caution about how they handle their finances.

It is definitely time to settle old debts, drastically reduce new ones, and control budgets with a firm hand.

"Both employees and their employers should be concentrating on a combined effort of promoting wise financial management," stresses Peter Setou, Senior Manager: Education and Strategy at the National Credit Regulator (NCR).

"The NCR is continually educating and informing consumers/employees on the role of the National Credit Regulator, objectives of the National Credit Act, consumer rights under the NCA, debt counselling, credit bureaux, budgeting, dealing with over-indebtedness etc. However, our success will be limited if there is no active support and participation from both employers and their staff."

Setou strongly advises employers to include educational programmes on managing finances and dealing with over-indebtedness into their organisations' wellness programmes.

Employees are also urged to make use of these services offered by employers.

"It is common knowledge that stress-related illnesses have a markedly negative impact on productivity, therefore employers should assume the responsibility of advising their employees on where they can obtain assistance. When, for example, employers note a rising incidence of garnishee orders within the organisation, they should take proactive steps to point employees in the right direction for advice and counselling."

Employees who already find themselves in a position where money available after payment of essential expenses is not enough to pay all other debts must act immediately because the chances are that they may be over-indebted. The first step is to approach their credit providers and negotiate lower instalments. In most cases credit providers are willing to assist. If this fails they need to contact a registered debt counsellor.

Recent Articles

Featured How are you taxed on your retrenchment package?

Unemployment is one of the biggest problems in South Africa. The emergence of the Covid-19 pandemic has exacerbated the situation with a lot of companies retrenching their employees.  When retrenched, you’ll receive a retrenchment package, but do you know how much tax you’re liable for?

Car repossessed – don’t be taken for a ride

When the country is facing an economic downturn, chances are your finances will feel the pinch. This can lead you to make bad financial decisions such as skipping your vehicle payments. But every decision has consequences and if you don’t pay your instalment, the bank will repossess your car. But what can you do when this happens?

 

Why you should consider gap cover

Your medical aid should protect you from incurring large medical bills when you’re sick. But what if your plan doesn’t cover the full cost of your medical expenses? We got in touch with insurance experts to find out whether gap cover is worth having.

Debt relief - What is your bank offering?

Going through a financial crisis is stressful whether it be as a result of losing your job, being short-paid, having to fork out towards an emergency payment, or finding yourself in the midst of a global pandemic. This is especially taxing if you have a debt to service. It is against this backdrop that banks are increasingly offering payment holidays. Justmoney looks at the various debt relief options available to you from the big five banks.

Deals

Premier Hotel and Resorts Special For Senior Citizens

Price: Available on request
When: Daily
Where: Nationwide

The President hotel 10% discount for locals

Price: Available on request
When: Until 31 October 2020
Where: Cape Town

Get 40% off when you book your stay at Colosseum Hotel

Price: Available on request
When: Until 13 December
Where: Cape Town


Latest Guide

Guide to debt rehabilitation solutions