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How Do I Manage My Debt When I Am Unemployed?

Paying your debts while unemployed.

The recent pandemic has led to a huge breakdown of the economy which includes rising unemployment. This has led to millions of people struggling financially. For many South Africans, rising debt needs have replaced rising income levels. If you find yourself in this situation, how do you pay your debt when unemployed?

If you’re recently unemployed with a pile of debt, you need to assess your situation, create a financial plan and make decisions accordingly. Financial planning is essential if you want to stay on top of your game.

Understand your rights.

Making ends meet is tough when you lose your job. Luckily, there are several government assistance schemes that can help you during this time. The Unemployment Insurance Fund (UIF) offers financial relief to those who have lost their jobs. You can also apply for the COVID-19 Social Relief of Distress grant created by the South African government. Apart from this, South Africa also has the SASSA Child Support grant to assist with caregiving of children.

The UIF can be a windfall when you become unemployed. To ensure you receive UIF, you need to register at a South African labour centre. When you are employed, your employer and you both contribute towards UIF. Make sure your employer is doing so, and this can be checked by examining your payslip.

Try writing an unemployment budget.

The best time to create a budget is before you need one, and the same thing goes for cutting costs. No matter what your finances look like right now we recommend that you cut down your expenses as soon as possible and start saving.

When building a budget, prioritise your debt payments before other expenses so that you don’t fall behind. If you don’t pay your monthly debt repayments, your credit score will decrease and you’ll end up in more debt. Continue making the minimum amount of repayments on time until the debt is fully settled.

Reach out to creditors.

If you’re struggling to afford your monthly debt repayments, ask your creditors how they can assist you during this time. Some creditors will offer a repayment holiday if you have been paying your bills on time every month. Other creditors may temporarily reduce your repayment amount. The best way to find out how your credit can help is by reaching out and making your creditor aware of your situation.

Debt Counselling.

In some cases, consumers find themselves deep into debt by the time they find a new job. If you find yourself in this position you might need professional help. We suggest finding the right debt counsellor who can take a look at your financial situation and give you the best possible advice.

If you are having trouble keeping up with all of your debt payments, there are ways to make it easier. If you qualify for an income-based repayment plan, then your monthly payments will probably be less than before. The potential lower monthly repayments can be used to cover other expenses.

Managing debt can be a real challenge during unemployment.During unemployment you will need to make a lot of sacrifices in terms of how you spend money. This will be the case whether you are out of work for a short period or if you are unemployed for an extended period of time. Get in touch with Credit Health should you find yourself in a difficult situation.


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