Debt Crisis Hits Harder
Thursday, 22 October 2009 16:31
This was in the Herald today:
2009/10/22
Nomahlubi Sonjica HERALD REPORTER
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THERE has been a dramatic rise in the number of people in the Eastern Cape seeking help in dealing with debt as the recession bites.
There are still about half a million people countrywide who cannot cope and need counselling, according to figures released yesterday by the Debt Counsellors’ Association.
About 115000 had applied for counselling and the number was increasing by 9000 a month.
“Our estimate is that there are 500000 people who should be applying for debt counselling at this time,” said association executive member Paul Slot.
Eastern Cape debt counsellors say the number of people needing help has increased “drastically”.
Ilsabie Landman, of Uitenhage Debt Restructuring Services, said yesterday that the figure was increasing monthly.
“Figures rise every month. People should not be ashamed about it, because there is help out there.”
Landman said she saw about 26 clients a month, double the number she had when the National Credit Act was implemented in 2007.
“I used to see between 12 and 14 clients and I know that most of our branches in Port Elizabeth see between 50 and 60 a month.”
Lawfin debt counsellor Monique Strydom added: “It’s quite a positive sign that people are coming forward, because they are not running away from their debt.”
But while people were coming forward for help, many did not know about the possibility of debt counselling, Strydom cautioned.
Tania Botha, a counsellor at Debt Restructuring in Jeffreys Bay, said her clients had tripled in the last three months.
“From January until June, I was seeing five clients a week. From July until now, the figures have tripled.”
Botha said the reason was because most families had either lost jobs or scaled down on overtime, resulting in their income being cut severely.
“I’ve seen a lot of clients from the fishing industry who have been hit hard by the strikes (earlier this year).”
Her clients also included people in the building industry and municipal workers.
“It is good that they are coming for debt counselling, because it is giving them time to get back on their feet.”
Melanie George, of ADCS in Uitenhage, said more people were becoming aware that they needed help and that they could actually get it.
“It is a responsible step, because they are admitting that they’ve got a problem.”
Consumer Assist chief executive Andre Snyman said debt counsellors negotiated with creditors on behalf of clients. They also prepared a repayment plan for them.
A person earning from R18000 a month had about 10 creditors on average, he said.
“These include a bond, a car, two to three credit cards, some loans and clothing accounts.”
Snyman said it was mostly married men who sought debt counselling since they had “the big accounts”, such as bonds and vehicle finance, registered in their names.
“The majority of women that we see are single mothers, some of whom even take their children out of school because they can’t afford it.
“Others do not get maintenance for their children from the fathers, or the money they get is not the same (as it was before the recession).”
Snyman said women mostly incurred debt on clothing accounts and credit cards.
Economists view increasing debt counselling figures as a good thing.
“It’s a positive sign,” said independent Port Elizabeth economist Roshan Makan. “People are taking an active approach to consolidating their debt”, which meant they would be able to manage their expenditure.
“The recession is biting all of us, but it is about how you manage your debt,” he said.
“Things are turning around, though. Within a year, we should be out of the recession.”
Rhodes University economics Professor Hugo Nel said the reason more people were coming forward for debt counselling was the weak economic climate.
“People who had high debt levels are finding it difficult getting out and have now reached a stage where they seek some assistance.”
Slot said yesterday that statistics showed 17,5-million consumers had credit agreements, of which 7,2-million people were three months or more in arrears.
“So there is a large number of people who are battling at the moment.”
According to the Credit Guarantee Insurance Corporation of Africa, the severe effects of the recession – the domestic economy’s first in 17 years – had led to the shedding of 253000 jobs countrywide in the first six months of this year. – Additional reporting by Sapa
