Consumers feel economic pinch

Tuesday, September 1, 2009

Pretoria - The National Credit Regulator (NCR) has warned that at least 150 000 South Africans could be under debt review by Christmas as the effects of the economic crisis take hold.

Andre Snyman, the Chief Executive Officer of Consumer Assist, said there were already 100 000 consumers under debt counseling. They owe a combined R20 billion of which R12 billion is owed on mortgages.

The NCR is receiving 10 000 new applications a month.

"For 18 months more, we will see rising numbers of consumers applying for debt relief. There is a lag between the economy lifting and the personal circumstances of individuals improving," said Mr Snyman.

He said people were only now seeking assistance after having used their reserves and investments. "But now they have no other choice but to get help through debt counseling".

Indebted South Africans are also tying up the courts, with an estimated 10 000 cases of consumers trying to get out of their debt before the courts.

This week the NCR further said that 1.3 million South Africans had fallen into arrears from June 2007 to July this year.

Director of Pretoria University Law Clinic Franciscus Haupt said that on average people who were applying for debt counseling had an average of 13 creditors.