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Media Info
 Millions in debt trap overwhelm counsellors
21 August 2008
A 29-YEAR-OLD employee of a major bank borrowed her way into serious financial difficulties. Her take-home pay is R8000 a month, but she has incurred so much debt through two home loans, vehicle finance, credit cards and personal loans that her monthly payments to creditors total R35000 a month.
She is one of six million South Africans now dangerously over-indebted, and one of a growing number of people registering for debt review and counselling to help them hang onto homes and cars in danger of being repossessed.
In terms of the National Credit Act, if a debt counsellor finds a consumer is over-indebted and recommends to a magistrate’s court for the consumer to be declared over-indebted, t he court can order re-organising the debt by extending the term of any contract, postponing payments, and recalculating unlawful fees or interest.
The young woman is one of 650 clients handled by Erna Scott of Consumer Assist.
“The largest problem was that credit was dished out like Chappies,” said Scott. “Credit providers didn’t do proper affordability tests.
“We take R6000 from her to pay her debts every month. She had to cut back on clothing, eating out, weekends away, her cellphone and petrol. Her parents live with her and they provide the food for the household,” said Scott.
A year ago, Scott only had 30 case files but the numbers have surged in the last 12 months.
She said it’s a myth that only the poor are suffering – many of her clients earn more than R20000 a month, and financial difficulties are across the colour lines.
“It’s everyone – white, black, coloured and Indian ,” said Scott.
CEO of Consumer Assist, Andre Snyman, estimates that six million South Africans are over-indebted:
“We get 60 new applications every day – that’s 1200 applications per month.”
Snyman said a minimum of 2500 additional debt counsellors were needed in South Africa. Currently there are only 500 registered counsellors .
Thami Bolani, chairman of the National Consumer Forum (NCF), agreed there was a chronic shortage of debt counsellors.
“Almost one out of three consumers we deal with is in financial difficulties. I think there is a growing need for this service. We always have a problem when we want to refer people. We struggle sometimes to refer consumers to really good debt counsellors.”
He added that the NCF was likely to launch its own debt counselling service next year to boost the numbers of counsellors.
Snyman said the biggest problem for many clients was that they had not budgeted for rising interest rates:
“If someone took out a R700000 bond two years ago their repayment has increased by R2500 over the last two years.
“Most people applying for debt counselling are between 25 and 35 years of age, earning between R8000 and R12000 a month,” said Snyman. - By TAMLYN STEWART
Business Correspondent
FOR FURTHER INFORMATION www.consumerassist.co.za 0861 21 22 23 debt counselling call centre
Andre Snyman - CEO - Consumer Assist
aurelia.espag@consumerassist.co.za / 011 654 6018 (Languages: English, Afrikaans)
Source: Daily Dispatch
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