Good news on SA debt front

2008-01-18 00:00

While thousands of South Africans continue to fall into the debt trap, key statistics released yesterday reveal that the situation is improving.

The number of civil summonses issued for debt in November 2007 dropped by 19,6% year on year.

Civil summonses issued in respect of money lent was one of the major factors contributing to the encouraging trend.

In keeping with the decline, summonses issued for the three months ending November 2007 decreased by 18,9% (year on year) when compared with the three months ending November 2006, according to figures released by Statistics South Africa.

The National Credit Act (NCA), which came into effect on June 1, 2007, and a number of interest rate hikes ensured that fewer South Africans fell into the debt trap during 2007.

"There was, however, an increase of six percent with regard to civil summonses issued for promissory notes and other acknowledgements for debt (this category includes credit cards)," added Statistics South Africa.

The number of "debt judgments" for the three months ending November 2007 decreased (5,3% year on year), while the number of "debt judgments" for November 2007 also declined slightly (1,1% year on year).

In addition, the total value of "debt judgments" recorded for the three month period (including November) dropped by 10,7% (year on year) to R450,8 million.

Economist and vice chairman of the National Consumer Affairs Committee, Professor Bonke Dumisa, told The Witness that while the situation remains problematic, it is improving.

"The interest rate increases have [negatively] affected people’s purchasing power. Even though many people had misgivings about the National Credit Act … it made it difficult for businesses that issued credit recklessly to collect this money."

He explained that the introduction of debt counsellors as part of the process brought about by the NCA also assisted in delaying the issuing of civil summonses.

The interest rate hikes of 2006 and 2007 have made it difficult for consumers to take on more debt.

A total of 109 046 civil summonses for debt were issued last November, while 73 735 civil judgments were recorded during the same month.

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