A recently dismissed Fin24 reader has received a payment for R70 000. Seeking expert advice on how to manage his debt, he wrote:
I was 28 years old and was fired. My takeaway package is R70000.
I have an unpaid student loan for R19000. I have two credit cards. One has the balance of R4000 and the other has the balance of R5000. I also have a car and pay a monthly R3000 excluding insurance.
I plan to get a job and work on a private business, but until then I need some advice.
Should I pay my mortgage and credit card to avoid overheads and spend the rest of my money paying for my car until I find something? Or do you need to send a furlough letter to your creditors to save money?
I currently live with my parents and do not pay rent because my family is supportive.
Neil Roets, Founder and CEO Debt rescue, response:
This is a very good question, and there are certainly a number of factors to consider when making this decision.
If you want to settle unsecured debt, we recommend requesting the possibility of a student loan settlement discount. A rough calculation is that if your unsecured debt (loans and credit cards) of about R28 000 is settled immediately, you will have enough money to make an installment payment for your vehicle for about 12 months while looking for employment or income. Will remain.
This is the best recommendation to reduce the high-interest rates normally imposed on unsecured debt, based on the information at hand.
Some consumers have accounts with credit life insurance. This often includes compensation for reductions. If you have such insurance, you can contact your creditor to see if you can file a claim. Second, the reduction cover should cover installments for a specific period of time, based on specific requirements. They need supporting documents (such as reduction letters).
If there is no reduction compensation but the creditor gives you a grace period (no payment is made to your account), interest will continue to be charged during the unpaid period. However, when considering this option, it is important that you continue to pay at least the required installments until you receive feedback and approval confirmation.
* Questions may be edited for brevity and clarity.