Nearly half of credit-active South Africans are in financial trouble. They can now call a single number to get advice on how to manage their debt.
This week, banks, along with the National Credit Regulator and the Debt Counsellors’ Association of South Africa (DCASA), launched a campaign to help people come to terms with their indebtedness.
The figures are frightening. Out of the 17-million people who have some form of debt, 47% have fallen more than three months in arrears with their payments. That means that nearly eight million South Africans are over-indebted.
The problem is that often people are too afraid to face their financial situation and ignore the growing problem until it is too late. This campaign is aimed at encouraging people to take action before it is too late.
By either calling 086 111 6362 or sending an SMS to 32422, customers who are struggling to make repayments will be able to get advice from a call centre managed by the National Debt Mediation Association (NDMA).
Their financial situation will be assessed and they will be given advice on what steps to take next and who to speak to. The banks will work together if the customer has multi-bank accounts.
What the banks are hoping to achieve is for customers to start repaying their debt. Although banks are seeing a slowdown in the number of new bad debts, the levels of existing bad debt remain stubbornly high.
Through this initiative, funded by the banks, it is hope that customers will start to take a more proactive approach to their debt situation.
One of the problems is that debt counselling has not been a resounding success. Although about 190 000 people have applied for debt counselling, the majority have withdrawn or terminated their debt-review process.
Only about 90 000 people remain in active debt review, and of those only 57 000 are making regular payments. About R200-million is paid each month to creditors through debt counsellors, and a total of around R2,5-billion has been recovered. Currently about 7 000 people apply for debt counselling each month.
However, teething problems with debt counselling (see related article) are being addressed. According to Paul Slot, head of the DCASA, standard rules, processes and documents have now been put in place to make it easier for banks to work with debt counsellors.
Reasonable time frames to repay debt have also been agreed, and all debt counsellors are undergoing a process to certify that their systems are credible.
According to Magauta Mphahlele of the NDMA, one of biggest issues with debt is that people are not comfortable talking about it as they believe they will be judged. The aim of the call centre is to be empathetic and non-judgemental and to help the customer find a solution.
According to Slot, once a customer has a workable solution, stress levels drop significantly and they are often able to repay the debt faster than planned. It is just about taking the first step and asking for help.
For further information distressed customers can also go to: www.ncr.org.za/finhelp
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