Payment holidays are over and the costs are starting to show.

When major lenders announced that they would be introducing payment holidays to help South African consumers deal with debt during the difficult lockdown, it was a breath of fresh air to many in debt. In fact, 1.6 million consumers opted to take payment holidays from home loans, vehicle finance, personal loans and the likes totalling R20.7 billion. Payment holidays did not mean that debt was forgiven for three months. It was simply a show of good faith by banks saying they would not take legal action if payments weren’t made. The money owed for those three months would however still be due at a different date, but with additional fees and interest. So what do these extras look like?

According to the latest research, which looked at the profiles of typical consumers who applied for debt counselling over the past year and opted for a three-month payment holiday, these are the increases the average consumer will see on their repayments:

  • For those who deferred bond repayments, the debt on their home loan has grown by R14 300.
  • A three-month payment holiday on vehicle finance came at an additional cost of R6 000.
  • The same three-month break from repaying a personal loan has cost consumers an average of R9 800.

People who took payment holidays on all three types of debt will, on average, have to repay R30 100 on top of what they owed.

What are the options if you are sitting with more debt post lockdown?

Debt Counselling is a process that allows for a consumer to officially be declared over-indebted and for the Debt Counsellor to negotiate a restructured payment plan. The Debt Counsellor must be registered with the National Credit Regulator and have an NCRDC number.

Once declared over-indebted and accepted into debt counselling the following will happen:

  • You will be protected from legal action for a period of 60 days from the day of application and after the arrangement has been concluded as long as you pay according to the new arrangement;
  • All your creditors will have to stop calling you and instead liaise with your debt counsellor;
  • You will be listed at the Credit Bureau as being under debt counselling;

For as long as you are under debt counselling you will not be allowed to get credit until you are issued with a Clearance Certificate once you have satisfied your obligations as per the Court or Tribunal order and in line with the National Credit Act.

The overall objectives for the Debt Counsellor is to:

  • Assess the full extent of your debt situation
  • Assess your assets that may be taken into account
  • Provide a debt remedy that:
    • Provides you with an acceptable standard of living while repaying your debts according to your affordability – this includes retaining the home and a vehicle where possible;
    • Provides you with an agreed, affordable and realistic monthly budget in order to resolve the situation in the shortest possible time;
    • Provides a repayment scheme acceptable to your creditors and confirmed by the Court;
  • Prevent repossession of assets where possible;
  • Rehabilitate you without detriment for the future; and
  • Allow you to get on with your life.

The overall objectives for you should be:

  • To work honestly and openly with the debt counsellor;
  • Declare all assets and liabilities – including all incomes and debts, and including bonuses and salary increases;
  • To pay the registration and debt counselling fees as disclosed at the first meeting;
  • To adhere to the agreed instalments and to pay these at the agreed dates;
  • To keep in regular contact with the debt counsellor for the full length of the agreement; and
  • To agree and commit to the debt remedy – this may include surrendering credit cards, closing accounts and realising some assets.

To investigate if Debt Counselling is the right fit for you, email us at or call 0861 977 873. You can also complete our free online application for here and we’ll get back to you.

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