You can apply for debt review if you are unemployed, but unfortunately you cannot apply for debt review if you have no income at all. The National Credit Act (NCA) specifies that, for a consumer to qualify for debt review, they must be gainfully employed or earning some income every month. The debt review process is predicated on your ability to generate income. It's intended to make your debt repayments more sustainable, but not cease them entirely. The good news is that unemployment doesn't automatically disqualify you from applying for debt review. However, in that case:
- You need Alternative Income Sources: If you have alternative sources of income, such as rental income, a pension, or investment returns, these can be used to show your ability to pay creditors under a restructured plan; AND/OR
- You have a Support System: Sometimes, if you have a partner or family members willing to assist with payments while you're unemployed, this support can be taken into consideration; AND/OR
- You receive Unemployment Benefits (UIF): If you receive sufficient unemployment benefits that can cover restructured debt repayments, this could also qualify you for debt review.
How do you apply for Debt Review?
The process typically starts with a consultation with a certified debt counsellor. The debt counsellor will review your financial situation in detail, including all your debts, assets, income, and living expenses. If you have some form of income or are likely to secure employment soon, the debt counsellor may accept your application and negotiate with creditors on your behalf.
What are your Alternatives if you have no Income?
If you have no income at all, debt review may not be possible because there are no funds to work with. However, do not lose hope. A debt counselor can advise you on other options, which may include:
- Payment Holiday: Arranging for a temporary pause on debt repayments until you find employment. This can be done to buy time while you look for a job or employment.
- Selling Assets: Liquidating assets to clear some of your debts.
Being proactive is crucial when you're unemployed and in debt. Contact your debt counsellor and creditors to inform them about your situation; many creditors have hardship programs for such cases. Also, consider adjusting your budget to reduce expenses wherever possible.
A Note about Being Married in Community of Property (CoP)
If you are unemployed but married in COP, you can still apply for debt review provided that your spouse is earning an income.
If you are financially stressed and do not know how to resolve your debt burden, contact Debt Sage to get assistance.