Many still drowning in debt

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Pretoria - It is clear from recent statistics that many people are still drowning in their debt.

“We see a daily increase in the number of clients that are applying for debt counselling,” said Neil Roets, CEO and pioneer of Debt Rescue. 

“Approximately 9 100 clients on average applied per month for debt review in the year 2013/2014 and we expect this figure to have increased dramatically in the new 2014/2015 National Credit Regulator report.”  

Even though more and more consumers appear to become over-indebted every year, it equally appears as if they still prefer to make more debt instead of attempting to reduce it. In the statistics for the quarter ending December 2014, there was a reported 4.02% quarter-to-quarter increase in the number of credit applications. 

Of these applications a staggering 53.49% were declined, indicating consumers are still not credit ‘healthy’. These consumers should have approached their debt from a different angle. 

Don't make more debt to pay debt

“Instead of attempting to increase their debt, they should have considered approaching a debt counsellor for assistance to pay off their existing debt. It is concerning that we see a clear increase in the number of over-indebted consumers, yet consumers still attempt to obtain more credit which will make them even more over-indebted,” said Roets.

A study by Debt Rescue of the financial situation of consumers who apply for debt counselling found that clients still use an average of 75% to 80% of their income to pay their debt. This is broken up as follows: home loans – 34%; vehicle finance – 29%; unsecured debt – 18%; credit facilities – 15%; and other debt – 4%.

It is also clear from the study that more consumers are 120 days or more in arrears on their unsecured debt than with any of the other types of debt. Roets indicated that the latest figures show an improvement in the number of bad debt accounts, but it should be taken into consideration that many bad credit records were removed during the credit amnesty, which would have an impact on these figures.

“It is also concerning that many clients whose credit records were expunged found themselves in the exact same situation within a few months,” said Roets. Many consumers still found themselves over-indebted, and many who were not over-indebted subsequently became over-indebted as they could now obtain credit where they previously could not.

“There is clearly still a big need for an alternative solution where these consumers can get proper guidance to ensure that they become debt-free,” said Roets. “This alternative solution can be found by applying for debt counselling with a reputable company such as Debt Rescue.”

Debt Rescue has assisted over 15 000 consumers to become debt-free since the company opened its doors in 2008.  It has been nominated as the debt counsellor of the year by the industry panel for the second year running. 

“If you find yourself in financial constraints, you should immediately contact Debt Rescue for assistance. Our expert staff will provide you with a personalised and affordable payment plan, which will give you much-needed financial relief.

"You can apply by visiting our website www.debtrescue.co.za, or you can contact our offices on 086 180 0009,” concluded Roets.