By Clayton Barnes
Every month 70 000 South Africans join more than a million others facing legal action because they are in arrears.
This comes despite claims from banks and other credit providers that they have radically reduced the number of customers taken to court for non-payment.
And economists warn that the credit crunch is only the tip of the iceberg as more interest rate and petrol price hikes loom.
Paul Beadle, the managing director of the financial website Justmoney.co.za, said there had been a massive increase in the number of people facing legal action for unpaid debt since the National Credit Act came into effect on June 1 last year.
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Before the act came into effect it was very easy to get credit and people often acquired more credit than they could afford. Now, though, it is much more difficult for people to get credit as the act prohibits creditors from lending money to individuals who are over-indebted.
Beadle said it was difficult to estimate the exact number of South Africans facing legal action for being in arrears with debt, but the figure was well over a million.
"We have established that 70 000 people join that group every month."
Beadle added that consumers were waiting too long to tackle their debt problems and should seek the help of a debt counsellor as soon as they realised they could not meet their monthly repayments.
The number of people applying for debt counselling through their website was increasing daily - often as a result of being turned down for a new credit card or a personal loan.
"Consumers are trying to tackle their payment problems by taking out even more debt, which is just making matters worse," he said. "People shouldn't put their heads in the sand about their debts; ignoring the problem could lead to bankruptcy and being blacklisted for years."
Debt Busters, one of South Africa's biggest debt counselling companies, deals with about 100 new clients a month.
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