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Media Info
 Debt counsellors bring in cash
14 December 2009
Debt counselling has created a significant increase in the amount of money consumers are paying off, Consumer Assist says.
"What debt counsellors have been able to achieve are massive gifts to creditors - retailers and banks - in terms of repayments made by consumers that amount to just over R1,7 billion this year and have saved creditors millions that they don't have to spend using debt collectors and lawyers to chase money," said Andre Snyman, chief executive officer of Consumer Assist
In May 2008 it was just R8,96 million, he said.
By August this year payments from consumers under debt counselling had leapt to R97 million, by September it grew another R10 million a month to R107,7 million and in October those receiving debt counselling paid R125,84 million back to creditors in that month alone.
Snyman said there were still problems as some creditors and consumers tried to manipulate the system.
"One of the top four banks is notorious about harassing consumers with phone calls, lawyers' letters and threats even after they have been under debt review and reliably paying for months and even a year or more. It's unlawful psychological warfare.
"But we also find consumers who try to manipulate the system, last year we had consumers applying for debt review before Christmas to try and get 60 days grace from creditors while they continued spending.
"This year we are seeing a pattern of some consumers saying they will go on debt review after Christmas because they want to see if they can get loans to spend more at Christmas. Either way those consumers are digging a very deep debt grave for themselves."
He warned that defaulters risk destroying their credit records and losing their assets.
Retailers had observed that customers were being responsible and not using up to their credit limits, leading to a decline in retail sales density.
Stores said the highest level of credit applications were from those with monthly salaries in the R5000 to R7000 range.
This means they could be next in line to hit the "credit skids".
He urged consumers to go for debt counselling if they felt stressed.
Source: TimesLive
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