Consumers worried about possible repossession of goods
Those who are unable to work because of COVID-19 are facing serious economic challenges.
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SABC News-Repossessed-Homes
Tshepiso Moche
29 April 2020, 14:30 [SAST]
Reading Time: 4minutes
Some South Africans are worried that their assets could be repossessed over lack of payment.
These are some of the fears facing South Africa’s middle-income households due to a loss or reduction in income since the implementation of the national lockdown. Those who are unable to work because of COVID-19 are facing serious economic challenges.
This means they’ll struggle to meet their financial obligations including paying rent, school fees and car installments.
The end of the month has arrived with burdensome debit orders and many are concerned that they just won’t have enough to pay up.
Despite the relief packages announced by government to cushion South Africans from the impact of the lockdown, many people are unable to access the benefits for various reasons.
Majority not registered with UIF
A significant proportion of the working class have not been registered with the Unemployment Insurance Fund (UIF) by their employers.
While some are still able to work from home and earn their full salary, others are either not being paid or having to settle for a reduced income.
A woman who wishes to remain anonymous, who was already under debt review even before the lockdown was implemented and now her situation has worsened.
She’s in the beauty industry and because she’s unable to work at all, she’ll only be paid half her salary.
She is worried that she won’t be able to meet her financial obligations.
“We have two small children and I still have rent to pay, groceries and all of that. I also have a vehicle, majority of the money goes there, almost like a full installment. 70% of what you’re supposed to be paying goes towards that. It’s difficult because you don’t know whether they’re going to say we want to repossess your car.”
Through her debt counsellor, the woman is now required to provide a letter from her employer stating that she’ll only be paid half her salary.
That letter must be accompanied by an updated payslip, as well as the latest bank statement.
Not really a payment holiday
Debt Restructuring Services Greyville’s Vyas Juggernath says, once they receive these documents from a client, they engage the banks on behalf of them on their proposed payment holidays.
“Obviously they do their own assessments, once those documents are in, they’re willing to give those clients payment holiday. If you look, it’s not really a holiday, a client still needs to pay those monies because what they do is they put a freeze on those accounts, over a two, three month period,” adds Juggernath.
”They won’t collect on those accounts, but the interest charges and the service charges still run on those accounts.”
I the video below, Standard Bank announced a 3 month payment holiday:
The Banking Association of South Africa has not been available for comment, but Juggernath says the “payment holiday” is one of the measures that the banking sector has put in place for the duration of the lockdown.
He adds that queries about people not being able to meet their financial obligations even after their debt has been restructured are not new.
He advises consumers who find themselves in a difficult financial situation to apply to be placed under debt review, instead of defaulting on their premiums or instalments, or waiting for debt collectors to hunt them down.
He says this lowers the risk of having assets repossessed. “A lot of people don’t know that this is available to them. They get caught by the banks calling or the collection services calling them, and forcing them to make a payment arrangement.”
”Most times, sometimes most of them can’t even afford it. Some clients came to us and said they’re forcing us to pay R500 a month, and we can only afford to pay R200 because they don’t do an assessment like a debt councillor would do.”
Speak to financial brokers
Meanwhile, the South African Insurance Association (SAIA) says policyholders who experience financial difficulties due to COVID-19 or the national lockdown are advised to speak to their financial brokers who will do their best to assist them on a case-by-case basis.
CEO of BrightRock insurance company, Schalk Malan, warns people against not paying their premiums when experiencing financial difficulties.
“Life insurance companies are offering clients different kinds of relief, so the best thing is to speak to your financial advisor, look at different options and make sure you understand the consequences.”
”In some cases if you stop your premiums, for example, an option called premium freeze or premium holiday, you might end up not having cover when you need to claim, which is very important to consider in a time like this,” explains Malan.
The video below looks at the difference between credit insurance and payment holidays:
