There are at least 92 000 people in South Africa who are likely to lose their homes in the next three months and almost half of the 18-million people who use credit facilities in this country are behind in their repayments or are finding it difficult to keep up with their instalments.
Perhaps the most worrying thing is that 24 000 cases are bogged down in the debt-counselling process and many of the banks are unilaterally terminating debt counselling and suing people because of the delays.
Debt counselling is a process that was set up as part of the National Credit Act and was aimed at preventing over-indebted people from losing everything. It was also aimed at stopping reckless lending where organisations extended more and more credit to people who were irresponsible.
At the moment about R214-million is being repaid via payment distribution agents to credit providers every month, by people who have chosen to enter the debt counselling process.
These facts emerged when journalists, representatives of the Banking Association of South Africa, the National Credit Regulator and the Debt Counsellors’ Association met in Johannesburg.
Apart from the sad statistics, some interesting new developments were unveiled such as the new computerised process for standardising repayments so that counsellors would be unable to offer creditors ludicrous settlement plans that would take decades to resolve.
The computer program seeks to balance a person’s monthly debts against their ability to meet the repayment schedule using defined parameters to arrive at a lump-sum amount that is distributed to the respective creditors. The program sets out to reduce the debt to zero over a period of five years.
The parties must agree to the restructured repayment schedule and abide by it.
According to Johan de Ridder, a spokesman for the banks on all debt-counselling issues, banks are making significant concessions on interest rates. However, he warned that banks had to be careful not to dump the 92 000 distressed properties onto the market as this would have a seriously detrimental effect on property prices throughout the country.
He says that banks have a vested interest to keep people in the homes they currently occupy and are hoping to own.
For those people who are not reaching an amicable settlement with their creditors and are part of the debt counselling process, there is a mediation system that will allow them to resolve the difficulties.
Anyone who is failing to resolve their financial problemsthrough debt-counselling can contact the National Debt Mediation Association on 086 111 6362.
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