Debt stress leads consumer to terrible decision

It is sad when one hears stories about consumers not knowing how to deal with their debt:

Baby, I am so sorry. I owe many people some money and I don’t have that kind of cash to pay them.” Those are among the final words written by a 22-year-old women from the Diepsloot area. Her name, ironically, was Happiness Mbedzi.  Shortly after writing these words she ended her own life. In the suicide note Mbedzi left behind for her partner, Ephraim Mudau, she went so far as to list all the people she owed funds to, alongside the amount of money she owed them. Her debts added up to only R3,320.

During the week she borrowed money to go to a local store in Diepsloot to buy rat poison. A couple passing by found her body later that same day, laying face down in the township’s extension 13. A suicide note was found next to her body, together with the phone number for her relative. One of her relatives said the day before she died people had come looking for Happiness to try collect some of the money she owed.

One journalist stated that in the area where Happiness lived “Debt is a big problem because we have such a huge unemployment rate,…In most cases, you will find young women selling their bodies to be prostitutes, while the young men resort to criminal activities,” …There is nowhere people can turn to for help if they are indebted,”.

Like so many others Happiness had turned to borrowing money to make ends meet. There has been a recent unsecured lending boom in South Africa.  Rajeen Devpruth, manager of statistics at the National Credit Regulator (NCR) said that ” the global housing market is dead, so credit providers are looking to other markets to make their money.” They are now heavily promoting unsecured credit loans.

Another industry expert points to a sad truth ” what consumers aren’t usually aware of is that a significant amount of money goes into the cost of the loan. Unfortunately consumers mostly look at the cost of the installment or repayment, and not the entire cost of credit and generally don’t shop around for credit …people who borrow money at this rate don’t understand that this cost of borrowing isn’t sustainable,”…

In Diepsloot, around 2 out of every 3 young people are unemployed. Some say that this makes a small unsecured loan at a local bank look like a good idea for residents who just want to make ends meet. But steep interest rates make it virtually impossible for many of these consumers to ever pay the loan back. Meaning these loans are actually recklessly granted. Proving this allegation however could cost several thousand rand at court. Something that these consumers cannot afford too try prove even if they wanted to. Desperate consumers often under estimate their living costs and some credit providers might turn a blind eye to inconsistencies in loan applications. Other options these consumers may have is to borrow funds from a stokvel or  perhaps a neighbour, but these too come with equally high interest rates.

Sadly many consumers like Happiness don’t know where or how to get help. “If I had told u the truth, u were going to be angry with me-so I decided to kill myself,” Happiness wrote in her suicide note before saying she didn’t know of anyone who could help her with her debt problem.

What a tragedy that Happiness was unable to go for debt counselling since the NCR have recently engaged in educational drives about debt review in the area.

Is Debt Review available to all?

Even if she had gone looking for help, a sad truth is that she may have struggled to find a Debt Counsellor to help her. After all there are still very few of these professionals in South Africa. Perhaps around only 500 practice in South Africa at the moment. Many Debt Counsellors have quite the industry due to pressure from credit providers against the industry as well as the stress of the heavy work load.  Another factor is that at the moment the revenue/fee structure for debt counselling make consumers like Happiness unprofitable and thus undesirable to some Debt Counsellors. Then too with some unscrupulous credit providers pressurizing consumers even after they have entered debt review (instead of acting in good faith in the process) consumers might still be pushed to extremes.

If you face debt stress seek help at once. Don’t hide your debt and the stress it is causing you. Tell someone. They say a problem shared is a problem halved. Debt Review can help consumers to settle their debts over time and Debt Counsellors can help consumers create better household budgets.

Visit sites like www.thedci.co.za or read the service directory in Debtfree DIGI each month. You can access the directory by reading the magazine for FREE right here on our site. Most Debt Counsellors do not even charge the NCA allowed fee of R50 to make an appointment. Get help today!

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