MONEY CLINIC: My wife and I are under debt review. Our salaries have been cut – what can we do?

A Fin24 reader and his wife, who are under debt review, seek guidance on how to survive debt repayment while earning less during the coronavirus outbreak.

He writes:

My wife and I recently went under debt review. I’m currently working from home; so is she. She’s been given notice that she won’t be receiving a full salary. I on the other hand will be getting my salary, but without overtime, and after deductions such as medical aid and pension fund contributions. 

My wife is supposed to pay half of the debt instalment amount into my account.  

The debit date is the 27th of this month but she’s only getting paid at the end of the month. She has informed the debt counsellor by emailing them the letter.

What can we do in this case? Payment should go off as per regulation with the debt company, but we won’t have any money left. What steps should we take? 

Benay Sager, Chief Operating Officer at DebtBusters responds:

We are sorry to hear that that the reader and their wife are having a very difficult time financially. Millions of South Africans are in a similar position with receiving either no or significantly reduced salaries.

The letter perhaps contains a few separate questions, so let us answer them one at a time:

  1. What is my debt counsellor doing (or what should they be doing) about this?
  2. Can I change my debit order date?
  3. Can I reduce the amount to be paid towards debt review?  

As a starting point, we would advise the reader (and all other readers in debt counselling who are in a similar situation) to inform their debt counsellors immediately that they will not be able to pay full amount due.  

In terms of the answers to the specific questions:

  1. Once the consumer informs the debt counsellor about difficulties faced, then any good debt counsellor should inform all creditors that the consumer will have difficulty paying the amount due, then send a form 17.3 to all creditors indicating that the consumer’s financial circumstances have changed. There are guidelines as to which documents should accompany such a request, so the debt counsellor can advise on this.
  2. It is possible to change debit order (or EFT deposit) dates. Debt counsellors have access to software that enables them to do so; therefore, once agreed with the consumer on the way forward, the debit order date can be changed by the debt counsellor.
  3. It is also possible to change amounts paid towards debt counselling, if the creditors, debt counsellor and consumer can agree on a new amount. Following on the 17.3 form request from the debt counsellor, the creditors may agree to receive a different (in this case, a lower) amount than what was agreed to as part of the debt counselling process. If they agree, then the debt counsellor, in consultation with the consumer and creditors, can change the debit order amount for future months.  

Our general advice to consumers (including those not under debt counselling) is to pay something (whatever they can afford) towards their outstanding debt every month, if they can. Even if a consumer is unable to pay the full amount, paying a partial amount shows commitment on the consumer’s behalf towards paying back their debt and keeping a good credit score, thus ensuring a lower cost of borrowing in the future.  

Compiled by Allison Jeftha. 

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