As a nation, our dismal track record in terms of debt and defaulting on repayments is nothing new \u2013 but the onset of Covid-19 has brought with it a debt pandemic that we need to recognise and rectify.<\/p>\n
This is according to Sebastien Alexanderson, chief executive officer of debt solutions provider, National Debt Advisors (NDA). 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.<\/p>\n
\u201cBetween 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,\u201d said Alexanderson.<\/p>\n
\u201cWith an already indebted nation \u2013 who are historically poor debt re-payers \u2013 this has been like adding fuel to a fire,\u201d said Alexanderson. \u201cAround 10% of our clients missed payments or made short payments on home loans and vehicles \u2013 with unsecured debt having the highest delinquency rates\u201d.<\/p>\n
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.<\/p>\n
\u201cLess people tend to skip retail store payments because they still need to keep their accounts going \u2013 as many people have resorted to buying necessities like food or school clothes on their credit cards or store accounts,\u201d said Alexanderson.<\/p>\n
He further said that it is not a helpless situation and it\u2019s important to realise that there is no shame in defaulting on debt commitments and there is help to be found. \u201cMany people continue to deny the reality of their situation. Subsequently leaving it too late to find viable solutions.<\/p>\n
“Consumers should ideally be looking at options like debt review 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 \u2013 on a debt which could very easily have been restructured by a registered debt counselor\u201d.<\/p>\n
If you find yourself in increasing debt, Alexanderson says that it\u2019s important to know that you are not alone. \u201cYou have options and there are professionals who can help you,\u201d he said.<\/p>\n