South Africa

SA consumers seeking help with debt has gone up by 31%

DURBAN - SOUTH African consumers who sought help to manage their debt increased by 31 percent compared to the same time last year, the DebtBusters debt index for the first quarter has found.

Debt counselling company DebtBusters head Benay Sager said yesterday the sudden increase was the culmination of consumers becoming more proactive about their debt and the lack of increase in real income.

“Although nominal income is 7 percent higher compared to 2016 levels, when cumulative inflation of 24 percent is factored in, real incomes have shrunk by 17 percent in five years. Many consumers are compelled to borrow to make up the shortfall,” said Sager.

The index, which tracked client trends quarter-on-quarter and over the past five years, also found people applying for debt counselling with take-home pay of more than R20 000 a month were spending over 60 percent of their monthly net income to service debt and had a persistently high debt-to-income ratio of more than 130 percent.

Unsecured debt was 53 percent, on average, higher than in 2016. For those with a net income of R20 000 or more, unsecured debt levels had increased by 76 percent. For these consumers, unsecured debt was the most common way to supplement the decline in real income.

Despite the grim numbers, Sager said there was some positive news as more consumers, particularly men, were proactively seeking help.

“The number of men enquiring about debt counselling has increased from 48 percent to 56 percent since 2016. In a society where debt isn’t readily discussed and many men may have avoided seeking help, this is encouraging,” said Sager.

He also said since 2016 the number of clients successfully completing debt counselling increased by 56 percent a year. In January alone, consumers with a collective R142 million in debt when they started the process obtained their clearance certificates.

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