Source: Melissa Tabor

Recognising, Avoiding, and Coping with Debt Stress

Debt can quickly become a destructive force in anyone’s life, and can also become a major source of stress and worry. The stresses caused by debts can often make taking action to rectify the situation or attempt to deal with debts even more difficult, and create a downward spiral that can be extremely difficult for the suffering individual or family to break out of. There are of course, many associated problems with debt, and we all deal with problems differently – some may approach debt head on, others may often ignore the implications and financial reality of their situation. Regardless of how we choose to approach a debt problem, debt stresses can quickly overwhelm anyone.

The Facts and Figures

Given the current global economic situation, there are many countries around the world whose inhabitants are struggling with debt, and South Africa is no exception. That said, the debt crisis for South Africans is a severe one, with around 5000 cars being repossessed every month, and there are roughly 18 million consumers that have taken credit in the last few years. One of the major problems is the ease of getting a loan or credit from both banks and smaller ‘payday loan’ companies. In fact, those who are on low incomes are the most likely to not only be targeted for loans but also the most likely to have difficulty repaying them. As some sources have pointed out, this is essentially due to the fact that banks have realized they can make huge profits off of low income workers.

The value of debt is actually rising, with a recent report suggesting that the value of consumer credit has risen by just over 9% based on findings from Sept to Dec last year, which is a short space of time for such a huge leap. The current approach of creditors has wide reaching implications, as there are strong cases that propose it was exactly this kind of lending, to consumers that were likely to default on payments due to low incomes, that was a major factor in causing the economic collapse a few years ago. It is an unfortunate fact then, that many South Africans, especially low earners, are likely to take credit options due to a combination of earnings, advertising and the constant ‘solutions’ that credit firms and banks are offering to them.

Debt Stress

Based on the above figures, it’s no real surprise that the amount of debt stress being suffered is also on the rise. Stress itself can manifest in a number of ways, from irritability to not being able to sleep, and affects everyone differently. Debt stress however, while manifesting in often similar ways, can be much more intense. This is mainly due to the constant harassment a person may feel from creditors – threats of losing their home, car, belongings and so on.

As well as causing mental fatigue and difficulties, debt stress can often cause physical symptoms too, and when there are many sufferers, can have a far reaching impact on society as a whole. South Africa is not alone in the problem of course. The UK for example, has seen an increase in the amount of credit lenders and payday loan operators in recent years, and is an issue that is starting to be taken more seriously. One thing that is fundamental to not only tackling debt but also personal well being and stress levels is recognizing the signs that you or someone you know may be stressed. While being in debt, and being pursued by debt collectors will be stressful, if a person starts to simply ignore, or refuse to acknowledge the mounting pressure, it could well be a sign they are suffering from stress. If left unchecked, this can make the situation much worse, as debt will mount up, collectors will become more aggressive, and the affected person could end up losing everything, including their mental and physical health. The first thing to do, if you or anyone you know is in financial trouble, is to understand the symptoms and causes of debt related stress, acknowledge the debt itself, and begin to take steps to deal with the situation.

Taking Action

Acknowledging the debt problem, and the associated stress is the first step. From there, individuals should then start to prioritise their debts – which are more pressing, which can be pushed back, and so on. Of course, any debts that threaten your home or basic requirements for living should be dealt with first – mortgage repayments, energy and water bills, and so on. Remember that most companies, regardless of how much you owe, will normally take even small payments if you can provide them on a regular basis.

In fact, it is well worth finding out your legal position on such matters, as creditors may have to accept a payment, however small, if you can prove that you can afford no more than that amount on a regular basis. Finding legal advice and other professional help is also a great way to help get perspective and support with debt problems. Trying to cope alone is a sure fire way to let the debt, and tress, mount up. Finally, it is worth noting that credit and store card debts work a little differently. Often, the minimum payment with these is designed to barely cover the interest, which means you’ll end up paying much more back with small payments as a result. In these cases, if possible, it can be better to simply clear as much as you can on a regular basis. Of course, these debts shouldn’t be a priority if you have more pressing ones, and while you should seek professional advice where possible, it may in some instances be better to allow a credit card company to sell the debt on to collectors, who may be willing to take smaller payments that aren’t affected by interest.

Overall, remember that no matter the scale of debt, it can be handled, and there are ways out. It may take time, patience and hard work, but there are often legal and professional bodies that can advise you when it comes to handling debt collectors and finances. If you start to feel like debt is mounting and getting out of your control, then seek help immediately.