Johannesburg – 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, the CEO of National Debt Advisors, South Africa’s leading debt solutions provider. He says that a recent analysis of its customer book demonstrated the far-reaching effects that Covid-19 has had on the finances of South Africans.
“Between March and December 2020, the analysis 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 that is historically poor debt repayers, this has been like adding fuel to the fire. Around 10% of our clients missed payments or made short payments on home loans and vehicles, with unsecured debt having the highest delinquency rates.”
He adds that up to 40% skipped retail store payments and nearly 60% failed to make personal loan repayments.
The latest Consumer Default Index 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,” he says.
He further notes that it is not a helpless situation, and it is important to realise there is no shame in defaulting on debt commitments and that there is help.
“Many people continue to deny the reality of their situations, subsequently leaving it too late to find viable solutions.”
Consumers should ideally be looking at options like debt review the moment they are unable to service their regular monthly debt repayments.
They should not wait for legal action by a creditor.
“By this point, they will find themselves having to fork out monies for legal fees.”
Follow @SundayWorldZA on Twitter and @sundayworldza on Instagram, or like our Facebook Page, Sunday World, by clicking here for the latest breaking news in South Africa. To Subscribe to Sunday World, click here.
Sunday World
