Struggling to pay the bills due to COVID-19? Here’s what you can do

Published on 7th May, 2020 at 03:31 pm

Now during the COVID-19 crisis, and in the months to follow, many may be facing retrenchment, demotions – typically with reduced pay – or forced to take unpaid leave. Bonuses and raises are being frozen by companies, while some cannot find jobs at all.

As the COVID-19 pandemic unfolds and governments put measures in place to flatten the curve, there are millions of South Africans still facing the pressure of bills, which is causing enormous stress. However, if you’re in this situation, there are still things you can do to reduce pressure on the household finances.

Negotiate terms

If you’ve borrowed money, it’s important to relay any financial difficulties to your lenders as soon as you can. “Take up contact with your bank, insurance company or other financial institution if you are unable to pay your premiums or instalments. Check with them whether there are ways of assisting you during this time. Many providers do offer assistance at the moment,” says Madri Jacobs, senior financial planner at Brilliance BlueStar Financial Advisory Services.

Many service providers may offer payment holidays. But Jacobs warns: “Do not take these unless you really need to, since you will be paying interest on deferred instalments. If you have to take up a payment holiday, make sure that you know what the exact terms and conditions are.”

Get a reduced interest rate

Call your home loan provider to ask if they can offer you a better interest rate, to reduce monthly cost, especially if you have a good credit score and have not defaulted with your loan repayments.

“Any client has the right to approach their lender to negotiate a reduction in interest rates, especially in light of the significant lowering of the bank rate and prime,” says Peter Van Den Bergh of Killaghy Business Solutions.

Apply for UIF

Employers are currently being urged to apply to the Temporary Employer-Employee Relief Scheme (COVID-19 TERS) on behalf of employees, which is being offered by the Unemployment Insurance Fund (UIF).

Funds will be released to companies to assist employees that are left cashless during the pandemic. Benefits are paid on a sliding scale to a maximum of R17 712 per month and will only be paid to companies struggling to pay full salaries.

Employees that have been retrenched can also apply for UIF if they register as a work seeker. You must apply for the UIF benefits as soon as you become unemployed or within six months of termination of employment. You can register and apply for UIF online.

Klaus Arnhard, founder of agency UIF-Hero, says: “Your employer is supposed to submit the UI19 electronically to the UIF. If that is a case the employee can claim directly via uFiling. If you can’t get your employment details updated by your employers, then go to your nearest labour centre or get an agency to help.”

Read more about the support available to individuals and business owners struggling financially during COVID-19.

Don’t relinquish your insurance

During this difficult time, it may be tempting to cancel your insurance policies. But more often than not, this is a bad idea.

“We ordinarily need insurance cover for losses that we would not be able to carry ourselves, or those losses that would result in great hardships or even financial ruin. It is very likely in these uncertain times that, for most people, any losses could spell disaster,” says Peter Nkhuna, senior assistant ombudsman at Ombudsman for Short Term Insurance (OSTI).

That’s not to say you can’t create any savings during lockdown. Nkhuna adds: “Consumers should rather review their cover and see if this exercise might not result in some easy savings without compromising the amount and extent of cover they have.

“For example, if you travel less in your car, there is a possibility that you could save. Some policies are based on the average kilometres travelled in a month, with fewer travelled kilometres meaning a lower premium.”

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