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Retrenched! What now?

In this week’s blog, we at Consumer Debt Support (CDS) discuss the issue around the alarming increase of retrenchments. It affects consumers and the stress that goes with the news when receiving the letter confirming the date of lay off. Retrenchment can affect any worker at any time. It causes panic and fear when there is no back-up plan to buffer you when you become retrenched.

The biggest panic is when this consumer has to deal with the reality of not having options to cover the lost income. What now? How does one deal with this traumatic news, knowing the income will stop in 30 days and you don’t have alternative employment plans to cover household expenses, insurance, school fees, vehicle and home loan payments and paying your unsecured debt.

What strategy and planning can one put into place to ensure one can cope and survive financially during the time after retrenchment and seeking employment that could take a while to be back in the work seat?

In South Africa, we know we are in a recession and in a difficult financial market. This spills over into the business market, affecting companies and their profit margins. Unfortunately, it forces companies to lay off workers, which is quite scary.

Retrenchments have a massive impact on the individual financially. We at CDS often meet consumers that are battling retrenchment and the loss of income. The main concern is that no planning was put into place for when retrenchment and loss of income could happen to them. Most of us don’t do proper affordable financial planning for the possible worst situation. We can’t anticipate for when we are confronted with the unknown, like being laid off at work – -retrenched and falsely believed that you had job security. We must realise we are living in difficult financial times and therefore one has to take planning very serious.

Here are a few key points that can help set the ball rolling in the event of receiving a retrenchment notice to ensure you do the right steps. You can manage the situation and remain calm by taking control.

Step one:

Immediately contact all your creditors and inform them of the situation you are finding yourself in because your job lay-off will affect your ability to pay your debt. Ensure you keep details of the person you spoke with, and ask for a reference number relating to your inquiry with your creditor. Should you need to forward the documents to your creditor for their records, ensure you have the correct email address to do so urgently. Ask your creditor the right questions, for instance, do I have insurance on my account? Who is the insurance company and what are their contact details?

Step two:

Contact the particular insurance companies and find out whether you have retrenchment cover. What would the claiming procedure all entail? What supporting documents would the insurance broker or company need from you?

How will the insurance cover your debt?

And for what duration of time?

Will the insurance cover the full contractual payment of the debt obligation?

How long will it take to finalise the claim?

Keep record of who you speak with and their contact details, it does help to deal with one person only.

Where you have an Income protector, ensure you inform your insurance company of the situation and buffer your income for the next six months.

Step three:

If you have a credit life insurance in place, contact your insurance broker or the company where you have this insurance. In most cases the insurance will cover a portion of your income for up to six months. It should give one immediate relief.

If you do not have any insurance, please do not hesitate to contact CDS immediately so that we can discuss your options. https://debtcentre.co.za/contact-us/

Step Four:

Inform the family or your partner about your situation. It is will help you to deal with it easier when you know everyone important in your home knows you will have no income at the month end.

You and your family will feel secure when you can share that the insurance options are investigated and your claims are being processed.

Step Five:

If you have UIF, ensure you start the claiming process as soon as possible. As the law stands, you can’t claim UIF after six months of being laid off. Ensure you do it as soon as possible to receive contribution when you need it most. You will not receive your full monthly salary, but your UIF claim should cover at least a portion of your lost income.

Step six:

If you have an overdraft and revolving credit facilities, refrain from using those accounts or available credit.  When you have no income, or drawing UIF and receiving insurance cover, it is a good idea to look at cutting cost where you can. Redo your budget and spend within your means. If you are paying too much on bank fees and charges, look at cheaper options to ensure you spend within your means. If it means you must open a savings account for the time being, then you must look into that.

Remember, it’s within your power to ensure retrenchment does not become a nightmare for you and your family. If you are struggling with the retrenchment effect on your health it is a good idea to visit a psychologist for help.

Conclusion:

Retrenchment can affect anyone no matter your position in a company or your status. We are so dependent on our monthly income. Plan ahead: keep record of your insurance company’s contact details, policy numbers because you will need to access your insurance and claim for benefits when you are retrenched.