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Pretoria - The high rate of unemployment is adding to the already high indebtedness of South Africans, says Credit Ombud Manie van Schalkwyk.
He was commenting on the release of Stats SA’s latest Quarterly Labour Force Survey last week which shows an unemployment rate of 24.9 percent in the fourth quarter of 2012.
“Many people simply can’t find work and this is affecting households’ ability to pay their debts,” says Van Schalkwyk. “We’re seeing high levels of over-indebtedness across the country.”
Van Schalkwyk cautions consumers who have lost their jobs and who are unable to find work to contact their credit providers as soon as possible and tell them about their change in circumstances, to improve their chances of renegotiating their repayment terms.
“Credit providers are more likely to be willing to negotiate lower repayment terms the sooner they are told about your loss of income,” says Van Schalkwyk. “Once you are three or more months in arrears, it may be too late and you could be negatively listed at a credit bureau.”
He says many consumers apply for credit, assuming their income is secure, but do not plan for a loss of income.
He offers the following tips:
- Ask your credit providers whether your agreement is covered by income protection insurance.
Prioritise your debts. Your home loan, rent, vehicle repayments and utility bills are classed as priority debts. Fail to pay these debts and you could lose your home or be evicted, have your electricity cut off, or have essential items such as your car repossessed.
Also list which debts have the highest interest rates and figure out how to pay these off as soon as possible, as the interest rates are usually higher and will soon mount upl.
- Revise your budget and get a clear idea of what’s coming in and what’s going out. Cut back on all luxuries and unnecessary spending.
- Use your redundancy package wisely. You can also use redundancy pay or savings to pay off some of your debt. Start with priority debts first. You’ll need to try and stretch this out for as long as possible, so avoid spending it as soon as you get it.