30,248 South Africans hit with debt summonses in just one month - IOL

More South Africans are being taken to court over unpaid debt as financial pressure on households intensifies. Statistics South Africa recorded 30,248 summonses against private individuals in July, up from 28,944 a year earlier.

More South Africans are being taken to court over unpaid debt, with summonses against private individuals rising to 30,248 in July, while debt judgments worth more than R1 billion were recorded over three months.

The latest Statistics South Africa figures showed that summonses against individuals increased from 28,944 in July last year, with money lent among the categories recording an increase.

Across individuals and other debtors, 35,995 summonses were issued in July, up 2.9% from a year earlier. The number of debt judgments increased by 3.1% to 10,732, although their combined value fell by 2.1% to R352.1 million.

The figures come as the cost of servicing debt has increased following the latest interest rate hike, which took the prime lending rate to 10.75%.

For borrowers already struggling to meet their monthly repayments, a summons means an unpaid account has moved into the legal system. It does not, however, mean that a court has ruled against the debtor.

Statistics South Africa’s figures showed that summonses relating to money lent increased to 7,632 in July from 6,946 a year earlier. Of these, 7,098 were issued against private individuals.

The category includes money borrowed, while separate categories cover unpaid goods, services, rent and other forms of debt. Summonses involving promissory notes, credit cards, dishonoured cheques and other acknowledgements of debt also increased, from 2,429 to 3,119 year-on-year.

The largest category remained other debts, with 10,879 summonses issued during July. Statistics South Africa includes medical fund debt, school and university fees, tax, property levies and outstanding salaries and wages in this category.

These are not all conventional bank loans. They include accounts and other financial obligations that can end up before a court when payment is disputed or remains outstanding.

The number of judgments against private individuals, however, moved in the opposite direction to summonses.

Courts recorded 8,464 judgments against individuals in July, compared with 8,814 a year earlier as their combined value fell from R284.8 million to R269.6 million, with more summonses were issued against individuals during the month, but fewer judgments were recorded against them.

The figures do not establish how many individual South Africans are in financial difficulty, as they count court proceedings rather than unique debtors. Summonses issued and judgments recorded in the same month also do not necessarily relate to the same cases.

The longer-term figures nevertheless showed an increase in debt matters reaching the courts. Between May and July, 101,758 summonses were issued, compared with 97,898 during the corresponding three months last year.

Courts recorded 8,464 judgments against individuals in July, compared with 8,814 a year earlier as their combined value fell from R284.8 million to R269.6 million.

The number of judgments increased by 7.6% to 31,076, while their combined value rose by 12.6% from R930.1 million to R1.047 billion – representing an additional R117 million in judgments over the three-month period.

The largest contributors to the increase in their value were other debts, money lent, and promissory notes and other acknowledgements of debt. Rent was the only category to reduce the overall value.

The provincial figures also showed differences in where debt matters were reaching the courts.

Gauteng recorded 12,280 summonses in July, compared with 10,081 a year earlier. This was an increase of 2,199 summonses, giving the province the highest number nationally.

The Western Cape followed with 7,225 summonses, while KwaZulu-Natal recorded 5,245.

Although Gauteng had the most summonses, the Western Cape recorded the highest number of debt judgments during July, at 2,442, followed by Gauteng with 2,259.

Gauteng nevertheless accounted for the highest value of judgments, at R97.8 million, followed by the Western Cape at R94.3 million and KwaZulu-Natal at R51.1 million.

Nationally, other debts accounted for R98.5 million, or 28%, of the R352.1 million in judgments recorded during July.

Money lent accounted for R83.1 million, followed by promissory notes and other acknowledgements of debt at R66 million. Judgments relating to services totalled R55.6 million.

Statistics South Africa's survey based on preliminary results covers 203 magistrates' offices, including small claims courts, representing approximately 98% of civil cases in South Africa.