Guiding consumers since 2009

NDMA calls for more solutions to aid over-indebted consumers

By Staff Writer

The National Debt Mediation Association (NDMA) called for a new approach to combat consumer’s over-indebtedness this week adding that a large portion of credit-active consumers having impaired credit records.


According to the latest Consumer Credit Market and Credit Bureau Monitor reports of the National Credit Regulator (NCR) of 76.5 million accounts, 12 million or 18% are three or more instalments behind and 50.7 million or 74% are in good standing.


While 9 million consumers have impaired records, not all these consumers are necessarily over-indebted. About 6.2 million of these have a combination of some impaired and unimpaired accounts as well as some adverse listings. “It is these consumers that have a better chance of rehabilitation if they act in time,” said NDMA CEO, Magauta Mphahlele. 


Of the 6.2 million consumers with impaired records, 2.3 million have an adverse listing which means that their account has been handed over to the legal department for collection or the debt has been written off and possibly sold to third parties for collection.


However, 3.8 million are three and more months behind with their accounts leaving them exposed to legal action and receiving section 129 notices. The NDMA warned that if these notices are not addressed within 10 business days of delivery they will be followed by a summons to appear in court and then judgment. Judgements allow the credit provider the right to auction, repossess or garnishee a consumer’s salary.


“One of the problems is that consumers are not aware that if they do not take up the options outlined in the section 129 notice their chances of redress become limited and more expensive,” says Mphahlele. “The sooner they communicate with their credit providers or approach the NDMA for advice, the better.”


She added that consumers should be provided with a range of effective and cheaper options in the credit market to help them get over their debt. The NDMA is, with the support of the banking industry and other credit providers, set to find ways of reducing the cost and complexity of rehabilitating over-indebted consumers. This will entail making credit providers more approachable and consumer friendly as well as alleviating the burden on the courts.


She added that the high rate of borrowing, coupled with a general slow-down in the economy, increased cost of living and unavoidable life events such as sickness, death and divorce has hit some consumers’ pockets. 


“When you start borrowing to pay off other creditors or to cover basic costs such as food, utilities as well as rates and taxes, it should sound the alarm bell,” says Mphahlele.  “It takes just one month of unpaid bills to start slipping into serious arrears and to become vulnerable to legal action. It is then much more difficult to negotiate restructuring your repayments with your credit provider.”

Recent Articles

Featured How are you taxed on your retrenchment package?

Unemployment is one of the biggest problems in South Africa. The emergence of the Covid-19 pandemic has exacerbated the situation with a lot of companies retrenching their employees.  When retrenched, you’ll receive a retrenchment package, but do you know how much tax you’re liable for?

Car repossessed – don’t be taken for a ride

When the country is facing an economic downturn, chances are your finances will feel the pinch. This can lead you to make bad financial decisions such as skipping your vehicle payments. But every decision has consequences and if you don’t pay your instalment, the bank will repossess your car. But what can you do when this happens?

 

Why you should consider gap cover

Your medical aid should protect you from incurring large medical bills when you’re sick. But what if your plan doesn’t cover the full cost of your medical expenses? We got in touch with insurance experts to find out whether gap cover is worth having.

Debt relief - What is your bank offering?

Going through a financial crisis is stressful whether it be as a result of losing your job, being short-paid, having to fork out towards an emergency payment, or finding yourself in the midst of a global pandemic. This is especially taxing if you have a debt to service. It is against this backdrop that banks are increasingly offering payment holidays. Justmoney looks at the various debt relief options available to you from the big five banks.

Deals

Premier Hotel and Resorts Special For Senior Citizens

Price: Available on request
When: Daily
Where: Nationwide

The President hotel 10% discount for locals

Price: Available on request
When: Until 31 October 2020
Where: Cape Town

Get 40% off when you book your stay at Colosseum Hotel

Price: Available on request
When: Until 13 December
Where: Cape Town


Latest Guide

Guide to debt rehabilitation solutions