While most of the banks have offered payment holidays to debtors who are in distress as a result of the coronavirus and the lockdown, this relief generally applies only if you were up to date on your payments up until March. But if you were in default before the lockdown, getting relief if you lose your job or your pay is cut is much more difficult.

The first thing to do is to check if your credit agreement has credit life insurance that will cover your repayments when you lose your job, are temporarily laid off or otherwise lose all or some of your income.

If that fails, Absa will extend payment relief to those who were “up to two payments in arrears before the COVID-19 crisis, in certain cases”, Cowyk Fox, the managing executive of everyday banking at Absa, says. 

First National Bank is working with the banking industry and government to explore solutions for customers who don’t qualify for relief “under the current criteria”, says FNB’s chief executive of retail, Raj Makanjee.

Nedbank’s chief client officer, Anton de Wet, says the bank will treat your fairly regardless of whether you were in financial distress before March or not.

In terms of the National Credit Act (NCA), if you’re in debt review and you fail to make payment according to the debt review order, your creditors have the right to take legal action against you. 

Some banks like African Bank have undertaken not to terminate your account from debt review during lockdown if you are unable to pay in line with your debt review order because of the pandemic.

And Fox says Absa will be lenient about these court order arrangements at this time.

Absa, Nedbank and FNB say they are following a guideline issued by the National Credit Regulator (NCR) in April on how to deal with consumers in debt review whose financial circumstances have deteriorated.  

The guideline acknowledges that the law makes no provision for debt counsellors to inform credit providers that your financial circumstances have changed. Therefore the NCR has introduced a form your debt counsellor can submit to your creditors – along with supporting documents, like a letter from your employer – notifying them of the change in your circumstances. 

It’s then up to your creditors to decide what, if any, relief they may offer you.

And the guideline says submitting the form won’t “override” your court or National Consumer Tribunal order on how much you must pay while in debt counselling. 

If you don’t pay according to your court or tribunal order, you will be in contempt of court or the tribunal and there could be legal consequences.

It is best to go back to the court or the tribunal to explain the change in your circumstances and to get your payment plan amended.

If you don’t yet have a court or tribunal order but your case has been set down for a hearing, the regulator suggests you must fill in its form and instruct your attorney to file a supplementary affidavit outlining the change in your circumstances.

The regulator’s form for reporting a change in your circumstances is not only for extraordinary times like these. It can be filled out when you suffer a temporary loss of income due to maternity leave, or if you are ill or injured.

But Benay Sager, the chief operating officer of DebtBusters, says since the COVID-19 pandemic, seven times as many consumers have sought temporary payment re-arrangements due to changes in their circumstances.

Some debt counsellors say that because the debt counselling regulations don’t provide for any relief from repayments, it would be wrong of them to advise you to seek this, as your creditors could come after you when the lockdown is lifted.

If you are in debt counselling and you are retrenched, get divorced, are incapacitated by illness or disability or if you die, there are legal ramifications, and only a lawyer can fix this, not a debt counsellor, says debt counsellor Charl Marais. 

Debt counsellor Zune Coetzer says filling in the form when you owe on your car or house could result in credit providers’ lawyers descending on you “like a pack of wolves”.

But Sager says the debt counselling industry is relying on the collective goodwill of the [credit] industry to help consumers who want to continue paying their debts but can’t while they are not getting a full salary or any salary during the lockdown. “They are asking for a pause. So we urge credit providers to see it in that light,” he says.

He says DebtBusters is working with credit providers and consumers on a case-by-case basis to make alternative arrangements.

Coetzer suggests that if you are in debt counselling you should deal directly with your creditors to get a lower instalment for a temporary period. 

If you make a new arrangement with your creditors, instruct the payment distribution agency to adjust your payments accordingly, the debt counsellors say.