DebtBusters: Unsecured debt levels have gone up by 30% due to lockdowns

The company has launched its debt awareness month campaign through a virtual webinar.

FILE: Exacerbated by the pandemic, a series of lockdowns and high unemployment, a growing number of consumers are now turning to unsecured debt to supplement falling incomes. Picture: Pixabay.com

JOHANNESBURG - Debt counselling company DebtBusters said there was an overwhelming demand from South African consumers seeking help this year.

The company has launched its debt awareness month campaign through a virtual webinar.

It said many in the country were already struggling with high levels of debt before the coronavirus crisis hit.

Exacerbated by the pandemic, a series of lockdowns and high unemployment, a growing number of consumers are now turning to unsecured debt to supplement falling incomes.

As relief measures to cushion the impact of the COVID-19 crisis on consumers came to an end, South Africa’s biggest debt counselling company said it saw a 40% spike in enquiries for its service last month.

DebtBusters COO’s Benay Sager said it was clear that in absence of a meaningful increase in income growth, South African consumers were supplementing their income with more unsecured credit.

“Consumers in 2020 were earning about 20% less in terms of their net income, which in turn, really forced them to seek help by predominantly borrowing more and what we have seen is that unsecured debt levels have gone up by over 30%.”

Sager said data from previous years showed that many consumers found themselves under financial pressure and often took out loans to see them through, adding more long-term financial stress.

Sager has warned that more lockdowns and a worsening economy mean things are unlikely to improve this year, however, many consumers are seeking help proactively to inform themselves of options available to tackle their debt burden.

Download the Eyewitness News app to your iOS or Android device.