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A Fin24 user who's friend has been unemployed for more than six months wants to know if creditors can write off her debts as she's unable to pay them.
She writes: "If someone has been unemployed for more than 6 months and battling/unable to find a job, are their debts written off by their creditors? A friend owes a bank for her daughter's student loan but she is unemployed and struggling to find a job so she can't pay this debt."
Rulane Bakane of Summit Financial Partners advises:
When a client is unemployed due to permanent disability, temporary disability, retrenchment or the diagnosis of a dread disease, credit life will cover the client.
Credit Protection Policy benefits the client in the event of:
• Death – the policy will pay out what you still owe your financial provider.
• Permanent Disability – the policy will pay out what you still owe your financial provider.
• Temporary Disability – while you are temporarily disabled, you will receive a monthly amount which covers your monthly instalments.
• Dread Disease Diagnosis – once there is a conclusive diagnosis of the dread disease, the policy will pay out the amount you still owe your financial institution.
• Retrenchment – your monthly instalment will be paid for a maximum period of 6 months per claim. You may only claim for a total of 6 months.
If the client is still unemployed she needs to obtain an affidavit stating that she is still unemployed and looking for employment.
The credit providers will try to collect or hand over the accounts to attorneys as bad debt written off, which means it will be administrated by their attorneys moving forward.
If the client is contacted by the attorneys she needs to send them the affidavit as proof that she is still unemployed and looking for employment. The client cannot enter into any commitment or arrangement with creditors or attorneys if she doesn’t have funds to service the debt.
The client can enter into new arrangements once she is employed, submitting a payslip, income and expenditure statement and 3 months' bank statements to negotiate affordable repayments with creditors or attorneys handling her accounts.
ALSO READ:
Under debt review and retrenched - what now?
Advice for a user who can't afford instalments
Will I qualify for credit after debt review?
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