South Africa: More Than Half Your Pay Could Already Be Going to Debt, and You Might Not Know It

People applying for debt review already commit 58.4% of their take-home pay to debt repayments, a new debt pressure index found.

More than half of applicants surveyed weren't sure whether they were already under debt review, and a quarter of those who guessed got it wrong.

If you're struggling under debt, you might not even know the full picture of your own situation.

A new report on South Africans seeking debt help found that many people applying for support don't know whether they're already under debt review, a legal process meant to protect over-indebted consumers.

The South African Debt Pressure Index, published by debt counselling firm Debt Solutions 4U and updated on 1 September, tracks people actually applying for debt help, not just general credit statistics. It found that the typical applicant is already committing 58.4% of their take-home pay to debt repayments, more than half of everything they earn, before covering rent, food, transport or anything else.

Of nearly 800 applicants surveyed between June and August, 51.3% said they weren't sure whether they were already under debt review. Where researchers could check that belief against the official record, one in four people had it wrong, some believed they were under debt review when they weren't, others believed the opposite.

Checks against the National Credit Regulator's official debt review register more than doubled in August compared to July, and nearly half of those checks came back showing an active debt review already in place that the person hadn't been fully aware of.

This fits a wider pattern of rising debt pressure. According to the Eighty20 Credit Stress Report, compiled with Xpert Decision Systems, 41% of credit-active South Africans were in default, meaning three or more months behind on at least one loan, in the first quarter of this year. Total outstanding loan balances across the country have climbed to R2.7 trillion, with South Africans opening 875,000 new loans in just three months, even as households face growing financial strain.

Gauteng carries the heaviest debt burden of any province, with Johannesburg, Pretoria and the East Rand showing the highest concentration of financial pressure nationally. Limpopo's mining communities and commuter areas in the Western Cape also showed rising strain.

If you're not sure whether you're under debt review, you can check your status for free through the National Credit Regulator or by contacting a registered debt counsellor directly.

Read the original article on Scrolla.