Debt Index shows significant increase in men seeking help to manage debt

The number of South African consumers seeking help to manage debt soared in the first quarter with enquiries at South Africa’s largest debt counsellor up 31% compared to same period in 2020.

According to Benay Sager, head of DebtBusters, the sudden increase is the culmination of consumers becoming more pro-active about their debt and lack of increase in real income.

“Although nominal income is 7% higher compared to 2016 levels, when cumulative inflation of 24% is factored in real incomes have shrunk by 17% in five years. Many consumers are compelled to borrow to make up the shortfall.”

The DebtBusters’ 2021 Q1 Debt Index, which tracks client trends quarter-on-quarter and over the past five years, also found:

• People applying for debt counselling with take-home pay of over R20 000 per month are spending over 60% of their monthly net income to service debt and have a persistently high debt-to-income ratio of over 130%.

• Unsecured debt is 53% higher than in 2016 on average. For those with a net income of R20 000 or more, unsecured debt levels have increased by 76%. For these consumers unsecured debt is the most common way to supplement the decline in real income.

Despite the grim numbers, Sager says there is some positive news. More consumers are pro-actively seeking help, particularly men.

“The number of men enquiring about debt counselling has increased from 48% to 56% since 2016. In a society where debt isn’t readily discussed and many men may have avoided seeking help, this is encouraging,” says Sager.

He says the other good news is that since 2016 the number of clients successfully completing debt counselling increased by 56% per annum. In January 2021 alone, consumers with a collective R142 million in debt when they started the process obtained their clearance certificates.

“It’s clear that the process works and is an effective way for financially distressed consumers to improve their financial situation.”

To encourage more consumers to better manage their money or get the help they need, DebtBusters has launched a range of free self-help tools that can be found at www.debtbusters.co.za.