SA’s biggest debt counsellor sees spike in calls in January

South Africa’s biggest debt counsellor, Debt Busters, has seen a 40% spike in enquiries for its service in January, its head Benay Sager said on Thursday, as relief measures to cushion the impact of the Covid-19 crisis on consumers came to an end.

Debt counselling is a process outlined in South African credit law, whereby struggling consumers get help from a consultant who negotiates with creditors to reduce interest rates and consolidate and cut down monthly payments.

Many in the country were already struggling with high levels of debt before the coronavirus crisis hit, and Sager said as relief measures like payment holidays came to an end it had been “inundated with requests”.

“More and more consumers are losing sleep over debt,” he told a virtual media briefing, adding however that many of those enquiring about its services last month did not qualify for the process because it requires them to demonstrate a source of income, which in many cases they had lost.

Debt Busters is the country’s biggest debt counsellor, accounting for around 17% of the market, which it says has around 200 000 clients overall.

The country’s banks, which issue the majority of debt, have reported that most consumers who utilised payment holidays and other relief measures return to making payments once those end. However, they say bad loans will continue to rise.

Exacerbated by the pandemic and a series of lockdowns, unemployment in South Africa has hit a record high of 30.8%. In line with previous trends, a growing number of strained consumers are turning to unsecured debt to supplement falling incomes, Debt Busters said.

Sager warned that more lockdowns and a worsening economy meant things were unlikely to improve this year.

“I expect the debt situation to get worse,” he said.