Seasons come and seasons go. Spring is here and it’s time for a fresh start for your finances. You know that old, old debt that you have almost forgotten about but still lingers in the back of your mind? Well, it is important to know that you may not have to pay that debt back anymore. This is due to a legal clause known as prescribed debt.
28 November 2012
Industry experts were proved correct yesterday as the Repo rate was held at 7%.
Luke Hirst, MD of South Africa’s biggest debt counsellor DebtBusters, says ‘We would like to send out an invitation to Gill Marcus, governor of the Reserve Bank, to come to our offices in Cape Town to speak to some of our indebted clients and find out the reality of the average South African households’ current financial situation.’
‘With all due respect, perhaps then the governor would think twice before keeping rates on hold.’
The result of the rate decision comes about due to the precarious stance of inflation and South Africa’s economic recovery from the first recession in 17 years but this does not help the indebted population who cannot afford to repay their debt and are facing losing their homes.
‘With an estimated 1million jobs lost in first 3 quarters of 2009 and further retrenchments this year, some relief needs to be given to South African consumers’, says Hirst.
According to the South African reserve bank, stats released for November 2009, showed that household debt amounted to 47, 1% of GDP, and that 58% of credit active consumers are in arrears. That is 10 million consumers.
Hirst comments, ‘This is exorbitant and only reiterates the need for further rate cuts. With an average of 9000 consumers applying for debt counselling monthly, debt problems are the challenge facing the South African consumer, while sticking within the 3-6% inflation target seems to be the Monetary Policy Committees priority.’
‘Although we appreciate this is a tough decision, it does not defer the need for relief from Debt.’