Ricochet News

Indications that dads in debt are now seeking help sooner

Jun 17, 2020
Indications that dads in debt are now seeking help sooner

East London - This Father’s Day may not be much of a celebration for dads and their families facing financial challenges as a result of the Covid-19 pandemic.

Data from South Africa’s leading debt counsellor, backed by anecdotal evidence, suggests that while things are very difficult, there’s a positive shift in sentiment when it comes to seeking help.

DebtBusters’ debt index for the first quarter of 2020 shows that even before the Covid-19 crisis many South African households were struggling with debt. Borrowing increased substantially, with total debt levels up 33% on average compared to the same period in 2016.

Total debt for top earners increased by 63% compared to the first quarter of 2016.

“The data shows that many more people need help with managing debt than four years ago. The Covid-19 crisis will exacerbate this,” says Benay Sager, DebtBusters’ Chief Operating Officer.

A past problem in South Africa has been that people wait too long before getting help, try to resolve the situation themselves or retreat into denial, hoping the problem will sort itself out. The reasons are varied but include historic patriarchy, concerns about social standing and misplaced notions about debt counselling.

Although sentiment is shifting, in many households fathers are still perceived as the breadwinners and protectors of their families. Typically, this can make it hard for them to ask for help if they’re unable to meet their financial obligations.

“The potential consequence is that people who wouldn’t think twice about going to a lawyer or accountant for professional advice, wait too long before consulting a debt counsellor. The tragedy is that instead of getting the help and guidance they need to get out of debt they can end up losing everything,” says Sager.

Fortunately, DebtBusters’ quarterly debt index and an informal internal survey shows that these attitudes are beginning to shift.

“The debt index shows a substantial increase in the number of consumers with home and vehicle finance seeking debt counselling. The number of credit accounts consumers have when they apply for debt counselling indicates that while people are getting into debt faster, they’re also seeking help sooner,” says Sager.

The survey findings show that fathers’ reasons for undertaking debt counselling varies. For younger fathers in their 20s and 30s, owning a house and car and saving for tertiary education for their children topped the list. For fathers over 40 it was more important to invest to increase their quality of life.

“What’s reassuring is that all these fathers are committed to providing for their families, have realistic and obtainable goals and claim to be optimistic about the debt counselling process.”

The numbers suggest that the positive shift in sentiment is well founded. DebtBusters’ clients who have completed debt counselling has increased by 65% per annum over the past four years.

“Although the current circumstances mean more people are going to need help to manage their debt, the good news is that there is a definite shift in sentiment that may previously have delayed or prevented making that decision.”

Case study

Nigel Alexander*, a father of three, applied for debt counselling in 2016 after taking out a sixth unsecured loan which put him in an untenable financial situation.

The interest rates on some of these loans were as high as 25% and he was paying R11 000 a month in debt repayments.

After agreeing to debt counselling, DebtBusters was able to negotiate an interest rate of 2%. His new monthly debt repayments are R2 205. As a result of the reduced rate when he completes debt counselling, he will have saved R19 000 in foregone interest payments and monthly fees. 

“As a father I am now able to provide for my family without depending on some of my children to financially fill the gaps – this is a burden no parent wants to ask of their child. I have seen how it places additional strain on families and debt counselling alleviated the pressure we all felt because my debt situation affected so much more than just myself.

“It has helped me think and talk about my finances in a way I’ve never done before and I now have the foresight to be able to plan for the future – sharing the lessons and knowledge I’ve acquired with my children and wife.

“With Father’s Day around the corner, I want dads to know that this process works and that it has made the world of difference to me and my family. My debt won’t be cleared by then, but I look forward to the day I receive my clearance certificate stating I am debt free.”

*Not his real name.

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