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Johannesburg - Debt counselling has created a significant increase in the amount of money consumers are paying off, Consumer Assist said on Monday.
"What debt counsellors have been able to achieve are massive
gifts to creditors - retailers and banks - in terms of repayments made by consumers that amount to just over R1.bn this yearand have saved creditors millions that they don't have to spend using debt collectors and lawyers to chase money," said Andre Snyman, chief executive officer of Consumer Assist.
In May 2008 it was just R8.96m, he said.
By August this year payments from consumers under debt
counselling had leapt to R97m, by September it grew another
R10m a month to R107.7m and in October those
receiving debt counselling paid R125.84m back to creditors
in that month alone.
Snyman said there were still problems as some creditors and
consumers tried to manipulate the system.
"One of the top four banks is notorious about harassing
consumers with phone calls, lawyers' letters and threats even after they have been under debt review and reliably paying for months and even a year or more. It's unlawful psychological warfare.
"But we also find consumers who try to manipulate the system,
last year we had consumers applying for debt review before
Christmas to try and get 60 days grace from creditors while they
continued spending.
"This year we are seeing a pattern of some consumers saying they will go on debt review after Christmas because they want to see ifthey can get loans to spend more at Christmas. Either way those consumers are digging a very deep debt grave for themselves."
He warned that defaulters risk destroying their credit records
and losing their assets.
Retailers had observed that customers were being responsible and not using up to their credit limits, leading to a decline in retail sales density.
Stores said the highest level of credit applications were from
those with monthly salaries in the R5 000 to R7 000 range.
This means they could be next in line to hit the "credit skids".
He urged consumers to go for debt counselling if they felt
stressed.
- Sapa