South Africa: Debt Is Nothing to Be Ashamed Of

The amount of people becoming over indebted is ever-increasing world-wide.
The European credit crises' influence on the South African sector is still unknown, but financial advisors have been speculating if Absa's affiliation with its main shareholder and European bank, Barclays, has something to do with the decline in Absa's shares.
The bank also had to write off much more bad debt than they anticipated, especially in the mortgage sector.
If one of South Africans' main financial institutions is showing signs of credit difficulties amongst its clients, there might be reason for worry.
However, consumers aren't taking financial advisor's advice to heart.
It's certainly not showing in the rise of unsecured loans and car sales.
South Africans' appetite for loans might be a sign of some greater financial difficulties, but the South African Reserve Bank reassured the National Credit Regulator that this is not the case.
The NCR's main concern is responsible credit lending and therefore it is their responsibility to ensure that a credit bubble doesn't rear its head in the future.
Admitting that you are over indebted before being issued a creditor's letter can save you time and money, but many consumers don't even respond to a letter 129 after they have received one, never mind seeking debt help the moment they cannot keep up with all their repayments.
The letter 129 informs a consumer that they are 30 working days late with their repayment and that they have 10 days to smooth things out with their credit provider.
It also informs them that they can seek debt counselling to restructure their credit instalments according to their affordability.
Yet, many consumers don't take the chances they get and seek the help of a debt counsellor when it is almost too late.
According to the South African law, once a consumer has received a letter 129 for a debt, that debt cannot be included in the debt review unless some other arrangement can be reached with the credit provider.
This means that all the consumers other debts have to be restructured around their living expenses and debt that they have already received a letter 129 for.
The more debts they are in arrears for, the less there is that a debt counsellor can do to organize a way for the consumer to afford their debt.
The aim of debt counselling is getting out of a bad debt situation, not just making debt payments more affordable.
It is therefore imperative that a debt counsellor can calculate a way for the consumer to afford their repayments and living expenses.
The National Debt Mediation Association (NDMA), a non-profit organization established by the credit industry to combat over-indebtedness of consumers, warns consumers that it is extremely important that they contact their credit provider once they have received a letter 129.
The debt counsellor can do this on the consumer's behalf or the consumer can seek the help of an alternative dispute resolution agent.
The NDMA is the national alternative dispute resolution agent for registered South African credit providers.
With all these channels put in place for consumers to avoid over indebtedness or remedy their situation if they should be over indebted, why are consumers still facing legal action from creditors on a daily basis? In most cases, consumers didn't use the tools to their advantage or in cases where the consumer didn't have an income, debt counselling wasn't an option when they couldn't repay their debts anymore.
However, South Africans are seeking the help of debt counsellors more frequently, especially in the last year, but it is still nowhere near the amount of consumers who are over indebted.
Could South Africans be too proud to seek help? Of course you can remedy your own situation, but this is simply not a practical approach and few people have the knowledge and time to negotiate with creditors or the discipline to stick to a tight budget and avoid the lure of their credit cards.