MONEY CLINIC | I've been forced into early retirement and can't afford to repay my debt, what can I do?

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A Fin24 user who retired early is struggling to pay credit card debt amounting to over R109 000.

She writes: 

I was forced into early retirement at age 60 and I am now 63. I have only one credit card debt but its R109 000 which I had whilst still working. I have been struggling to make payments and usually have to draw out what I've paid. I left work with no pensions and from January this year I am only on a SASSA pension.

Please help with advice on what to do. I can't afford the R3 500 monthly payments as I only receive R1 780 per month.

I have no assets or savings. Please advise. 

Mark Bishop, Managing Member at Credit Clear responds: 

There is not much she  can do because he does not have any savings and has not planned properly financially.

Ideally, a person should ensure that all their debts are paid before retirement, however, in today's economic climate, this may not be possible and they find themselves in a position where their pension income is  significantly lower than what they were earning whilst employed.

The only advice that we can offer is that the consumer attends at the Bank, where the credit card debt exists, to ascertain whether there was in fact any insurance cover over the credit card debt and if so, if this will cover the entire debt or a portion thereof.  If no insurance cover is available, the next option would be to request the Bank to either reduce or stop the interest entirely and then make arrangements to pay a vastly reduced amount towards the capital. 

Ignoring the debt is not an option and should not be considered at all. This will lead to legal action which will not only escalate costs on the debt, but will place further pressure on the consumer. The consumer needs to face the debt head-on and even if she pays a smaller amount, this is a show of good faith on her part and will most certainly ensure that the relationship between the consumer and the Bank remains amicable.

*Disclaimer: Credit Clear is not a registered financial advisor

Questions may be edited for brevity and clarity.

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