A bit of good news: debt cases are down

2008-03-21 00:00

The number of civil cases for debt continued to decrease during the final quarter of 2007, suggesting that a significant percentage of consumers and businesses have not over-extended themselves.

According to Statistics SA, the number of civil judgments for debt for the three months ending January 2008 decreased by 15,1% year on year.

The number of civil summonses for debt dropped by 15,3% year on year during the same period.

Some economists have described the latest statistics on debt levels as fairly good news.

Economist at the University of KwaZulu-Natal, Clive Coetzee, told The Witness: “It is believed and argued that the average South African consumer is very much indebted.

The trend suggests that it is not necessarily the case and that consumers did not just go and borrow with their eyes closed.”

He said the figures show that most consumers and businesses have borrowed on safe margins. “If I have borrowed with a four percent margin and rates increase by two percent, it [interest rates] will have no impact on me. Only if rates increase by more than four percent will I be in trouble … ”

Interestingly, the data also shows that certain areas, including Durban and Johannesburg, experienced increases in the number of civil cases recorded during 2007 when compared with 2006.

Pietermaritzburg remained stable during 2007, the report shows.

Nedbank economist Nicky Weimar explained that these figures are expected to rise. “It takes a while before we know whether the cycle has changed. As a bank, we know that there is an increase in credit-problems.”

However, she said the situation is not nearly as bad as in 1998.

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