DEBT DEFENCES

Blacklisting, administration and garnishee orders are all mechanisms used by creditors to get back money owed to them by increasingly over-indebted South Africans. The number of civil summonses issued for debt in the past year, increased by more than 12%.

South Africans spend an average of 66 cents of every expendable Rand to service debt.  The appetite for credit has contributed to three interest rate hikes this year – and more are expected.

To curb reckless lending practices, the Department of Trade and Industry introduced the National Credit Act in May this year.  For the first time, the formal banking sector and micro lenders are regulated by the same legislation.  It requires registration of all credit providers; quotes must be given on all credit agreements; reasons must be provided if a credit application is declined and interest and fees are regulated.

Debt counseling is available to help over-indebted consumers restructure their debts.

Consumer education is a priority – to educate South Africans about the new Act, but also about wise spending practices and the implications of incurring debt.

Producer Karin d’Orville investigates the devastating effect of over-indebtedness on a number of Gauteng residents – and how the National Credit Act will establish a generation of credit-savvy borrowers and lenders.