Struggling consumers look to loans, credit to survive

AS MOST debt payment holidays have lapsed and access to the UIF’s Temporary Employee Relief Scheme (TERS) stopped for many, households are struggling to make ends meet and are using credit to service debt.

Statistics SA said the number of civil summons issued for debt had decreased by 59.7% as well as civil judgment which declined by 62.7% while the value of judgments also decreased by 62.3%.

For June, 8 274 civil judgments for debt amounted to R135 million. And in the Western Cape, 6 562 summons were issued, the third highest figure in the country after Gauteng and KwaZulu-Natal with 1 206 judgments made which amounted to R20.9m.

A study conducted by financial technology company PayCurve found that nearly 80% of more than 500

South Africans surveyed are seeking loans to meet monthly expenses.

Consumers are also struggling to pay their municipal bills according to the National Treasury’s Local Government Revenue and Expenditure report for the fourth quarter released this week. At June 30, consumer debts stood at R191.5 billion, an increase from the third quarter’s 181.3bn. Households account for R133.9bn of that and government entities R14.8bn.

“Job losses, interruption in income, lack of accessibility to government allocated relief funds and the rising cost of food and electricity, left many South Africans reeling in the first three full months after lockdown,” said chief executive of National Debt Advisors Sebastien Alexanderson.

“With people just returning to work, and many having to pay loans taken from family and friends over the past few months, as well as dealing with the rise in petrol and food prices – paying more than what you were paying on your debt (including your home loan) before lockdown will be hugely challenging.

Debt counselling company DebtBusters said payment holidays, from April to June would cost the 1.6 million South Africans who took them an extra R20.7bn. Chief operating officer Denay Sager said the payment holiday came at a cost of accumulated interest on the debt.

“In a country as over-indebted as South Africa, especially when the economy is contracting, this is enough to push people who were just about making ends meet into a situation where their debt-to-income ratio is unsustainable.” |