150 000 SA consumer under debt review by Xmas
September 1, 2009
Consumer debt is spiralling with 150 000 consumers expected to be under debt review by Christmas, the National Credit Regulator (NCR) said on Tuesday.
The NCR said the 100 000 consumers presently under debt counselling owed R20 billion of which R12 billion was mortgages.
Even if the economy began a slow recovery, for at least 18 months there would be a rising number of consumers applying for debt relief.
"There is a lag between the economy lifting and the personal circumstances of individuals improving," Andre Snyman, chief executive of debt counselling company Consumer Assist, said in a statement.
"At present we are seeing more hardship, not less," he said.
Snyman said people were only now coming forward for debt counselling.
"They have been using their reserves for example, their savings and investments but now they have no other choice but to get help through debt counselling," Snyman said.
He said consumers attempting to address their over-indebtedness were experiencing delays as there was a 10 000 case logjam before magistrates' courts.
The courts were mostly refusing to make rulings until there was a declaratory order clarifying consumer and creditor rights in terms of the National Credit Act (NCA), he noted.
"That finally came from Justice BR du Plessis in the Pretoria High Court on August 21 but with the courts already overstretched it is unlikely they will be able to make much of a dent in the 10 000 cases already stacked up before the end of the year," Snyman said.
The NCR's Peter Setou confirmed that 1.3 million South Africans had fallen into arrears from June 2007 to July with 93 000 under debt review -- affecting R12 billion of mortgages or R20 billion debt in all -- and at a rate of 10 000 new applications a month.
He said the number of those under debt counselling was expected to reach 150 000 before this year ended.
When the NCA came into effect in June 2007 there were seven debt counsellors nationwide, there are now just over 1 000.
Franciscus Haupt, director of Pretoria University Law Clinic, said debt was a factor of privilege.
"The poor are coping, they've learnt how to do it over many periods."
"Usually debt is the result of the ostentation of the nouveau riche."
Haupt said on average those applying for debt counselling at the law clinic had 10 creditors, "some have as many as 16".
Snyman said on average those applying for debt counselling nationwide had an average of 13 creditors.
He said the University of SA agreed debt was a disease of affluence with research showing those most indebted earned R700 000 per annum or more. - Sapa
|
|
