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Should I use my provident fund to settle debt?

A Fin24 user who is considering using his provident fund to settle debt, seeks expert advice.

The user writes: "I have debt that I want to pay, I am under review and want to get out, I also have my provident that is R575 000.00. What should I do?"

Wikus Olivier from Debt Safe answers:

Whatever you do, do not use your retirement money to repay your debt. If you are under debt review and there are payment arrangements in place, there is no need to make hasty decisions. You have protection against your creditors and can make monthly repayments as per the repayment plan. There are currently two ways that you can get completely out of debt review.

The first is when you have satisfied all the debt obligations in the debt review and have repaid all your debt.

The second is if you are able to recommence with your original installments at the original contractual terms.

I would not advise you to exit debt review prematurely, but rather hang in there until your financial situation has improved.

I would like to iterate again that you should under no circumstances use your retirement money to pay off debt if you have an existing income and repayment arrangements in place.

ALSO READ:

Advice for a user who can't afford instalments

Is debt consolidation the best option?

Advice for an over-indebted mom

*Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.



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