As a nation, our dismal track record in terms of debt and defaulting on repayments is nothing new – but the onset of Covid-19 has brought with it a debt pandemic that we need to recognise and rectify.
This is according to Sebastien Alexanderson, CEO of National Debt Advisors (NDA) - South Africa’s leading debt solutions provider. Alexanderson explains that a recent analyses of their customer book demonstrated the far-reaching effect that Covid-19 has had on the finances of South Africans.
“Between March and December 2020 the analyses done by our National Debt Advisors Research Department showed that Covid 19, the lockdown and subsequent interruption of income negatively impacted the finances of 80% of South African households,” says Alexanderson.
“With an already indebted nation – who are historically poor debt re-payers – this has been like adding fuel to a fire,” says Alexanderson. “Around 10% of our clients missed payments or made short payments on home loans and vehicles – with unsecured debt having the highest delinquency rates”.
Alexanderson added that up to 40% skipped retail store payments, and nearly 60% skipped personal loan payments. Furthermore, the latest Consumer Default Index (CDI) by Experian indicates that personal loans saw a deterioration while credit cards and retail store accounts have shown steady improvement. “Less people tend to skip retail store payments because they still need to keep their accounts going – as many people have resorted to buying necessities like food or school clothes on their credit cards or store accounts,” says Alexanderson.
He further says that it is not a helpless situation and it’s important to realise that there is no shame in defaulting on debt commitments and there is help to be found.
“Many people continue to deny the reality of their situation. Subsequently leaving it too late to find viable solutions. Consumers should ideally be looking at options like debt review (as per the National Credit Act) the moment they are unable to service their regular monthly debt repayments and afford their living expenses. And not wait until legal action has commenced by a creditor. By this point in time they will find themselves having to fork out monies for legal fees – on a debt which could very easily have been restructured by a registered debt counsellor”.
If you find yourself in increasing debt, Alexanderson says that it’s important to know that you are not alone. “You have options and there are professionals who can help you,” he concludes.
PERSONAL FINANCE