SA is drowning in debt

South Africans are drowning in debt despite a slight drop in the number of people being summoned to court for owing money.

According to Statistics South Africa, in June this year, Gauteng had the highest number of cases (17 603) followed by KwaZulu-Natal (8 800).

However, these are also the provinces with the biggest populations.

Nationally 48 169 summons for debt were issued, valued at more than R350 million.

The value of civil default and consent judgments for KZN came in at more than R42.3 million for June this year. The figure for Gauteng was more than R100 million with the Western Cape second at about R66 million.

Statistics South Africa collected the information from 203 magistrate’s courts around the country.

It represented about 98% of all cases countrywide.

Julie Smith from the non-governmental organisation Pietermaritzburg Agency for Community Social Action said the slight decrease was unusual.

She put it down to banks making it harder for people to borrow money and the fact that those from lower income households were generally excluded from these types of credit. They went to informal money lenders.

“The middle class is under pressure,” Smith said. This group have to pay school fees, security, medical aid as well as house and car loans.

“We are living in a culture of fear. It is not productive,” she said.

Neil Roets, the chief executive of Debt Rescue, said the decrease in civil summonses and civil judgments was due to changes in the law which had become more pro-consumer.

Roets said credit providers were using different methods to collect money and consumers were using debt counsellors to address their financial woes.

He said banks had realised fighting with the consumer was not productive and were now working with them to resolve problems.

“This is definitely the start of a new trend as banks are seeing the benefits of debt counselling,” Roets said.

Professor Bonke Dumisa, an economist, said the National Credit Act had played a role in controlling the amount of debt people were allowed to take on.

However, he believed that the middle class continued to live beyond their means.

“We are a consumption driven society,” Dumisa said.

He added that some South Africans faced challenges that were unique to this country like the “Black Tax”.

It becomes a burden on young Africans who, in addition to paying their own expenses, have to take care of extended families.

This often increases their levels of debt.

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