So what exactly is Panic Finance Forbearance and who is it for?
Panic Finance Forbearance or Distressed Customer Solution is essentially a less formal step before debt counselling. It’s a policy put in place by the bank, in line with the regulatory requirements of the National Credit Act (NCA), to advise and assist customers experiencing financial difficulty.
Panic Finance Forbearance suffers from a lack of awareness in the public space. It’s a service that can benefit a wide range of distressed customers, but is underutilized due to this relative obscurity. Raphael goes on to describe the two main ways in which customers initiate the Panic Finance Forbearance process:
The proactive approach:
This generally involves a customer identifying their need for assistance – whether they foresee difficult financial times ahead or have already missed a payment and realise that they need to take action – and contacting the bank before their situation becomes untenable. This approach is highly desirable and to be encouraged, as it can prevent the problem from compounding and creating even greater challenges in future. Prevention is better than cure, after all.
The reactive approach:
This is the most common way in which customers become aware of the Panic Finance Forbearance process. When a customer is in arrears and misses a significant number of repayments, the bank’s collection team will contact them to assess the situation and take action. The objective is to determine if there is a willingness by the customer to pay their debts, if there’s an inability to do so due to financial difficulty, the bank can actively help the customer resolve the situation. “Ultimately the customer should have an understanding of their own financial situation “If you miss a payment and you know it’s a once-off that you can resolve next month, then that’s fine. But if you can see an impending problem and you know you’re going to have difficulty in meeting your payment obligations in the next few months, we encourage you to contact us. We are trying to build this relationship of trust and open, honest communication so that we can help. And if the customer is proactive and contacts us before the problem becomes too serious, all the better.”
In essence, if you think you may be approaching a period in which you’ll struggle to pay your debts, take action and seek help from the bank. The Panic Finance Forbearance process will help and the team will assess your individual situation and subsequent needs to provide a personalized solution for you.
What does Panic Finance Forbearance actually do and how will it help?
Example 1:A seasonal contract worker reaches the end of a contract and will be out of work for the next three months and therefore unable to pay the full amount on their monthly home loan repayments during this period, so they initiate Panic Finance Forbearance. The bank then grants the worker a short-term payment reduction for this period to ensure they don’t default on their debts. After this period the repayment amount reverts back to its original value.
Example 2:A couple finds that their monthly income is drastically reduced after one of them is retrenched, thus they are unable to afford their monthly vehicle repayment amount of R5 000. Through Panic Finance Forbearance, the bank permanently restructures their loan, extending the term and reducing the repayment amount to R2 500, which the couple can afford.
It may seem that the bank is losing out in an effort to save the indebted customer, but Peter and Raphael argue that this is a highly beneficial situation for both parties. The Panic Finance Forbearance process not only serves to strengthen the relationship between bank and customer by defying the stigma that banks are only there in the good times, but by relaxing the loan, rather than allowing it to default, the bank also decreases the ugliness of subsequent legal action.
Don’t wait until it’s too late
Panic Finance Forbearance Will assist in line with the act The assist members reduce debt in all areas – Banking, retail, and loans should member be affected by the following
- Retrenchment
- Unfairly dismissed
- Contract ended
All cases need to be documented and proven. If Retrenched – Necessary Documents to be provided – process to be verified. If Unfairly Dismissed - Necessary Documents to be provided – process to be verified – CCMA case number to be provided and outcome. If contract ended - Necessary Documents to be provided – process to be verified. Spouse to receive benefit if legally married in a court of law.
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