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Bay’s debt disaster

Battle for survival as jobs slashed, prices hiked

RISING interest rates, petrol and food prices and a general increase in living costs are plunging con­sumers deeper into debt, with an increase seen in the number of people seeking debt coun­selling.
Debt relief agencies across the country have seen an increase in debt review applications, receiving an average 14 000 applications from cash-strapped consumers a month.
In Nelson Mandela Bay, some in­dividual debt review companies have seen an increase of up to 50% – up to about 50 cases a month – on applications for relief as house­holds increasingly battle to meet their monthly repayments.
Among the reasons cited for the debt headache are job losses, with the city having shed a staggering 23 000 jobs in the first three months of the year, according to Statistics SA.
The latest National Credit Regu­lator statistics show that more than half of credit-active consumers are over-indebted, with the average ow­ing about 75% of their monthly in­come to creditors and behind on three months’ instalments on at least one account.
Kwazakhele resident Xolani Siqwana, 49 – a taxi operator – said people barely made it through until the end of the month. “If one has R1 000 and you go to do some gro­ceries, you end up coming back with only two plastics [bags].
“You buy R50 worth of electricity and it’s depleted before you know it. Each time the petrol price goes up, we are all in smoke. We do not enjoy the fruits of freedom. We will end up like Zimbabwe. The impact of this affects everyone.”
Debt Rescue chief executive Neil Roets said they had seen a 40% in­crease in applications, with the most affected age group – 31- to 45- year-olds – 53% of their clients.
“We believe this is largely due to a combination of the drastically in­creasing costs of living and con­sumers realising the relief and legal protection they can get through debt counselling,” he said.
On the most indebted age group, Roets said it could be attributed to the fact that they were more likely to be dealing with a home loan, ve­hicle finance and possibly having children of school-going age.
According to the company’s debt statistics, the ratio of applicants was split 51% women and 49% men, with the bulk of debt due to person­al loans – 38.9% – store cards at 22.5% and credit cards at 21.9%.
Uitenhage mechanic Khaya Matanzima, 35, echoed Siqwana’s senti­ments.
“I have a wife and two children but struggle to support them. Un­less something drastic happens soon, people’s houses will be repos­sessed by unsympathetic banks,” Matanzima said.
“There is also no prospect of bet­ter job opportunities. I do not know what to do next.”
Celeste Koekemoer, 42, a teach­ing assistant from Central, said prices for everything had skyrock­eted in recent months.
“The economy has gone back­wards. I spend R600 a week on pet­rol. You can’t even afford to save money anymore. I can’t afford to buy a property and you pay a ridicu­lous amount to rent,” she said.
Monique Strydom, of Debt Sense Group, in Newton Park, has noted an increase in appli­cations for debt relief.
“It’s a daily struggle out there because everything is going up. Interest rates go up and thus one’s instalments go up and when petrol goes up then food prices go up.”
Bay debt counsellor Cornel Stry­dom, of Debt Review Centre, which has seen a 44% increase in clients – up to 80 applications monthly – blamed unsecured lending for the spike in debt.
“It has become a lot easier to ac­cess lending, with the aggressive marketing used by some micro lenders luring consumers who would not ordinarily qualify for credit into a cycle of debt, as people
pay debt with debt,” he said.
Strydom said with an apparent lack of adequate checks by online lenders in particular, people had sunk themselves into a deep finan­cial hole.
Since debt counselling was intro­duced by the National Credit Act (NCA) in 2007, about half a million consumers have sought relief, with an average R255-million collected from those in counselling each month.

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