National Debt Awareness Month

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Debtbusters Promote Awareness of Debt Review

It is not uncommon for debt counselling firms or any business to self promote in an effort to get clients. Debt Counselling practice Debtbusters however are making an effort this month to get people talking about debt and to get the press to cover the topic. They are not focusing so much on themselves but have been providing information based on their client’s experiences with debt to try and spark conversations about debt and debt review.

Debtbusters have a good reputation for providing credit providers, the National Credit Regulator and the media with quarterly statistics about what they are seeing happening with debt levels of those entering debt review. As the debt counselling practice with the most clients, they have a decent pool of statistics to pull from. These statistics though coming from one source do help paint a picture of what is happening across the debt counselling industry as a whole.

Presenting the Facts

In a recent online presentation, they shared some stats in regard to how consumer’s (who enter debt review) debt levels have changed over the last 4 years.

Here is some of the key information shared at the presentation:

Over the last 4 years, due to salaries not going up proportionally and inflation going up fast, consumers now actually have 20% less buying power than in 2016. This has lead to more and more people relying on credit to fill this growing gap in their needs vs income.

While a ‘normal’ income to debt ratio that is probably manageable would be using +- 40% of your income to cover debt, the current average they are seeing among consumers is people having to use 61% of income to pay their debt. This is leaving them with too little money for necessities and they are then falling into the trap of trying to use more and more credit to try to keep up.

The size of the unsecured credit that people are asking for (and getting) is now also larger than ever before. The banks and credit providers are giving out bigger and bigger loans and credit facilities. Debtbusters say that their new clients have a lot more unsecured debt owing. Unsecured loan amounts, in particular, are now normally 48% larger in size (value) than 4 years ago.

Those who earn R5000 or less have (over)committed to paying back 83% of their income towards debt each month. The type of credit they most rely on is unsecured loans. This is obviously unrealistic and it is no wonder they are reaching out for help.

People Need Help

The stats also show that people are reaching out for help sooner than before. While is a very good thing (and asking for help sooner rather than later is good) what it reveals is that consumers are now running into trouble, they cannot handle on their own, with only a few credit accounts. In the past, consumers entering debt review would have, on average, 9 different credit providers they owe money to, now consumers only owe 6 credit providers money but the amount they owe is as large or larger than before.

‘a 40% increase over a ‘usual’ January applications [for debt review]’

January 2021 saw an all time spike in the number of people asking them for help. They report a 40% increase over a ‘usual’ January applications (which is normally a fairly quiet month in debt review) and say thus far February has been even busier.

If You Need Help

If you are experiencing debt stress then do not wait to get help. Why not talk to a professional, NCR registered Debt Counsellor about your situation?

If you are experiencing debt stress then do not wait to get help

February is typically a month where many people finally decide to take control of their runaway finances and it is a great month to enter the debt review process (if it is the right solution for you). Chat to a Debt Counsellor about how you might better be able to get to grips with your debt this year.