A Fin24 user has to deal with a sudden reduction in monthly
income. He writes:
My wife has recently lost her employment, effectively
cutting our monthly income by R15 000.
My income after deductions amounts to about R23 000. Our
living expenses (and there is nothing extravagant to it) adds up to about R20
000 while our debt adds up to about R11 000 per month.
Until my wife finds new emplyment, effectively we are short
by about R7.5K a month.
What are our options? Can one freeze debt repayments for a
month or two?
Clark Gardner, CEO of 6cents.co.za and Summit Financial
I am sorry for this predicament. We have found that most
lenders are prepared to assist in "bad luck" situations.
As a first step contact all your creditors and request a
moratorium on your payments for two or three months as a result of the loss of
an income. Request that they agree to this in writing thereby protecting you
Make sure you keep communicating to them on the prospects
and timing of new employment opportunities.
If creditors fail to agree on this or new employment
opportunities do not come your way then you may need to explore more drastic
action such as debt counselling.
Please note that most credit agreements contain credit life
insurance that usually provides retrenchment cover. This would mean that in the
event of retrenchment the insurance would cover your next 6 to 9 months of
Another option to explore, which may attract greater debate,
is for your wife to cash in her retirement fund limited to the tax free
portion. This tax free portion is R315 000.
Use these funds to settle your unsecured debt as they
attract interest and fees in excess of 40% per annum whilst your savings merely
attracts 7% on average net of fees.
Once your wife again earns income then ensure you exercise
great discipline in catching up on your retirement savings. We would gladly
assist in auditing the settlement balances to ensure they are accurate.
Disclaimer: Fin24 cannot be held liable for any investment
decisions made based on the advice given by independent financial
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