[DEBATE] : (Fwd0 SA consumer debt getting much worse
pbond at mail.ngo.za
Sat Jun 21 14:32:49 BST 2008
Debt crushing SA
June 21, 2008 Edition 1
Within 48 hours of getting paid, three million South Africans have a
bank balance of below zero.
Four million South Africans have adverse credit records and about 15 000
people are undergoing debt counselling.
This, says debt counsellor Richard Marsden, is the stark reality as
people struggle to survive rising fuel costs, food prices and interest
rate hikes. And, with two more interest rate increases expected this
year, the situation does not look set to improve, especially with
Eskom's 13.3% electricity increase that was granted this week. Property
owners also need to find extra money for next month's rates increase.
Even middle-class South Africans are giving up their luxuries as they
battle with the plummeting economy. Interviews with middle to high-
income professionals made it clear that even the relatively well-heeled
were struggling with the effects of the soaring cost of living. Banks
are desperately trying to assist people to restructure their debt so
they don't lose their homes while auctioneers are selling more vehicles
as people try to avoid repossession.
Ian Wyles, owner of Ian Wyles Auctioneers, said there had been a 30% to
40% increase in the number of vehicles up for auction.
However, the company had not seen a huge increase in the number of
property auctions as financial institutions realised the situation
people were in. Floods of property sales did not help either the
property market or the financial institutions, he said.
Claudine Field, manager of First Trust Auctioneers, said it had seen
about a 40% increase in the number of people wanting to auction their
"Of this, nearly 40% to 50% are because they are downgrading to smaller
properties which are more affordable," she said.
Marsden, CEO of Durban debt counselling company Your Debt Helpline, said
from January to May this year, there had been an 80% increase in the
number of people it was counselling.
Randall Adams, debt counsellor and CEO of Johannesburg-based Ubuntu Debt
Rehabilitation, said it had also seen an approximate 80% increase in
"These are diligent people who have a budget. They want to pay their
creditors and put food on the table, but they are now finding themselves
short of, for example, R3 000 a month. People are coming into our
offices and wanting to commit suicide," he said.
Dick Mhango, head of Nedbank's strategy and business communications at
Nedbank Personal Loans, said, since June 2007 the bank had had 8 574
credit agreements in rehabilitation, amounting to more than R550 million.
Riana Scott, spokesman for Metrorail, said there was anecdotal evidence
that there had been an increase in passenger numbers.
It was difficult to assess the size of the increase, but staff had
noticed that there were more people on the trains.
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