More in court over debt

Johannesburg -Increasing numbers of people are being summoned to appear in court over bad debt.

In September alone, 59 588 civil judgments for debt amounting to R640.4m were handed down, according to data released by Statistics SA on Thursday. This is a 5.4% increase on the same month a year ago.

According to Quantec's chief economist Christo Luus, the debt burden faced by many consumers is still too onerous, even though the economy is moving out of a recession.

He said the latest debt numbers can be attributed to the fact that many people have lost their jobs during the past year. "There was an 800 000 reduction in employment numbers [this year], and most of those people had debts. It's evident that if you don't have an income you can't service your debt, even when interest rates have come down quite a bit."

Luus said the figure could have been higher if the number of consumers under debt review were included. The debt review process allows over-indebted consumers to have their repayment schedule revised under the supervision of a debt counsellor, without having to face a lawsuit.

In September the National Credit Regulator (NCR) said 100 000 consumers owing R20bn (of which R12bn were for mortgages), were undergoing debt counselling.

According to the NCR's latest Credit Bureau Monitor - which only has data up to June 2009 - credit bureaus had records for 17.79 million credit-active consumers. The percentage of consumers in good standing was 55.9%, while the number of consumers with impaired records was 7.85 million at the quarter ended June 2009.

- Fin24.com