When it comes to debt relief – encourage your staff to know their rights.
South Africa is facing a host of challenges that have affected individual’s lives on a number of levels.
Our economy is in a crisis, the stock market is tanking, huge enterprises are folding and we find ourselves facing a global pandemic to top it all off.
As a result, thousands of people have already lost their jobs and thousands more stand to lose their livelihoods in the coming months.
In the ensuing panic, people are making rash financial decisions in an effort to keep their heads above water.
While HR departments will be burdened with additional admin at a time like this, it is also important that they step up to help make things easier for staff who may be negatively impacted.
Urge staff to know their rights and to investigate all outcomes and long term ramifications before making choices, particularly with regard to debt relief.
For example, most reputable financial institutions offer ‘payment holidays’ to help people get past a certain period of non-earning. As attractive as this option may be in the short term, the long term consequences may be crippling.
As the term implies, a payment holiday affords an individual a certain amount of time in which they do not have to make repayments against a loan. However, this means that the term of the loan is extended and you will, therefore, pay more interest on your loan. In addition, it means that after the given period, you have to continue repaying your debt, but may not be in a position to do so.
But, you may ask, if I can’t make my payments now – what other option do I have?
If your loan comes with credit insurance you may qualify to have up to 12 months of the loan paid out by your insurer – a far better option than taking a payment holiday.
Prior to 9 August 2017 you may have had to elect to take credit insurance, however, loans taken after 9 August 2017 should have credit insurance built into the repayment structure.
As an HR manager, you’re unable to offer any financial advice, however, you should advise people to investigate all their possible avenues before jumping at the first possible option offered to them.