Many consumers who have received no salary and still awaiting for the approval of their Unemployment Insurance Fund have been asking about available options to assist in managing the little money that they have.

Some are tempted to withdraw their savings, while others want to cancel their insurance policies.

Ntombenhle Hadebe, 54, Soweto, said she did not know who to pay this month and did not know if she would make ends meet this month as she was only paid an apportionment of five days she worked towards the end of March.

Her employer has applied for UIF benefits and does not know when would that be paid, as her neighbour who has become a beneficiary after retrenchment has not received her April payout.

Consumer Line spoke to Tessa Verwoedt, a senior official at Bayport Financial Services, who said debt consolidation was one option which could improve current cash flow and save costs.

Debt consolidation involves taking multiple outstanding loans and combining them into one new loan with only one monthly repayment.

She said this could help consumers avoid having to pay several instalments to multiple creditors, each with their own associated costs.

Verwoedt said though this was idea, it also had its own costs.

"Consumers need to first consider what cost of this loan over the entire period will be," Verwoedt said.

He said during this difficult economic time as consumers are faced with cash flow challenges and forced to tighten their belts even further as a result of the lockdown, debt consolidation can be a solution for those who have trouble keeping up with their monthly payments.

"This solution is relevant where you have one or more loans in arrears," she said.

Verwoedt said your debt consolidation service can also negotiate settlement discount with your existing creditors reduce the overall debt burden and improve you credit profile on the bureaus.

She unpacked debt consolidation as follows:

The idea behind the debt consolidation is to reduce the number of creditors a consumer needs to pay on a monthly basis, making it easier to manage their debts repayment;

Debt consolidation will not include secured loans like car allowance or bond loans, but only apply to unsecured debts like credit cards, personal bank loans, lines of credit, and other debts like medical bills;

Debt consolidation has lower monthly repayment compared to existing creditor repayments, but it is important to understand the effects of the long term of the new loan as you may end up paying more interest over the life of the loan;

Once you have consolidated your loans, you cannot continue to use your credit cards even those you have not included in the debt consolidation;

This could be the best time to close the accounts and cut up debts;

A well managed debt consolidation can help to improve credit score which in turn will enable you to obtain a paid-up letter or statements from creditors and debt handed over to debt collection agencies which have been settled via the new consolidation loans.

This will ensure that the paid-up loans do not have additional cost; and

Check your credit report to know where you stand before you seek help from registered and trusted financial institutions when faced with challenges.