More South Africans seek debt counselling

South Africans in debt have risen by 18% compared to 2021.

According to DebtBusters, the combined effects of the pandemic, a weak economy, rising inflation and interest rates are resulting in more financial stress for many South Africans. Many are making debt counselling enquiries.

‘The positive aspect of this is that more people are seeking help, but there are still many consumers who could benefit from debt counselling yet continue to struggle every month hoping things will get better.

‘Anecdotal evidence from clients who apply for debt counselling indicates that debt can cause anxiety, loneliness and depression even for people who have never before had to cope with these issues.

‘This, in turn, makes it harder to face reality and deal with the root cause of the problem. It becomes a vicious spiral,’ said Nosiphiwo Nxawe from DebtBusters.

The 2020 UCT study also backed the theory.

Five stages of response to financial difficulties
There are typically five stages of response to financial difficulties. While not everyone will experience all of the five stages, if you can recognise the signs early, you can respond much more effectively.

Stage 1: Denial
People who are in denial about the extent of their debt often refuse to recognise that they need help. Typically, they make excuses for their inability to pay the bills. They are inclined to disregard creditors’ calls or payment notices, which can add to the pressure. Ignoring debt won’t make it go away and can lead to even more serious consequences such as creditors repossessing assets such as houses or cars.

Stage 2: Stress, anger and regret
This is when people begin to realise that things aren’t going to improve and can manifest itself as insomnia, anxiety and hypertension.
Sometimes the situation is made worse by taking out additional loans to make ends meet. When their credit score starts to reflect their difficult financial situation and their loan applications are denied, anger and regret can set in.

Stage 3: Depression
Confronted at last with the reality of their financial situation, it’s common for people to feel hopeless and desperate. This can be the critical phase of the debt-acceptance cycle. When people feel overwhelmed, they’re either paralysed by anxiety and do nothing or decide to seek help.

Stage 4: Acceptance
Coming to terms with debt is a significant step. According to DebtBusters, this is when people recognise they have over-stretched themselves, realise they are not able to solve the problem alone and are willing to accept help.

Stage 5: Resolution
People who have taken back control of their finances talk about feeling a sense of relief and happiness having put the anxiety of being over-indebted behind them. The best way to sustainably tackle and resolve debt is via debt counselling.

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