1,000 SA families are losing their homes every month to crushing debt

There has been a substantial increase in financially distressed consumers applying for debt review in the past financial year.

Neil Roets, CEO of debt counselling firm, Debt Rescue, said the company had shown a growth rate of well over 20% in the number of clients seeking debt counselling.

Earlier this week, Capitec bank also reported that it had notched up a 20% growth in its clients that had applied for debt review. The bank said 15% more customers had handed in retrenchment letters as supporting documents to be placed under debt review.

Roets said it was clearly evident from the substantial increase in numbers that times were tough – adding that further pain is expected amid the political debacle involving finance minister, Pravin Gordhan.

“This time round it is not just the poorest of the poor but the middle class and the well-heeled who are feeling the pain.

“It is also not limited to a specific age group although the 18-35 old age group is showing a slightly higher rate of distress,” said Roets.

The chief executive said there had been a higher rate of repossessions of both fixed property and other goods such as motor vehicles over the past year.

More than 250 families were losing their homes on a weekly basis to sales in execution because they fell into arrears with their bond repayments – about 1,000 a month.

Johan Muller, managing director of Problem Bond South Africa, said the problem of homes being sold in execution was growing. Specialising in assisting distressed homeowners who are on the verge of losing their properties, he said the situation was getting worse.

“If the unstable political situation in South Africa persists – or is aggravated by the present spat between the finance minister and the president – we expect many more home owners to default on bond repayments with a strong possibility of ultimately having their properties sold out from under them.”

Roets said total consumer debt was now at close to R1.6-trillion, citing the latest figures released by the reserve bank.

He warned that the very public fight between the finance minister and president Jacob Zuma could lead to downgrades by the three ratings agencies. It could also lead to a massive outflow of foreign investment capital, he said.

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