On August 13, President Cyril Ramaphosa signed the National Credit Amendment Bill 2017 into law.
The National Credit Amendment Act 7 of 2019 will amend the National Credit Act 34 of 2005 (NCA) to provide debt intervention procedures to be undertaken by the National Credit Regulator (NCR) in favour of certain over-indebted consumers.
The Act, among others, introduces section 86A, an application for debt intervention, into the NCA.
Section 86A provides that a consumer (the debt intervention applicant) may apply to the NCR to have themselves declared over-indebted. If the consumer is successful in their application, the NCR must refer the application to the National Consumer Tribunal (NCT) for an appropriate order.
Depending on the circumstances of the consumer, the NCT may reject the application, rearrange the obligations of the consumer under the qualifying credit agreements, suspend the consumer’s obligations under the qualifying credit agreements for a period of 12 months or may extinguish in part or wholly the obligations of the consumer under the qualifying credit agreements.
The Act provides for stringent qualifying criteria. To qualify for debt intervention, the consumer must be a natural person/s who does not qualify for debt review, who at the date of the application is party to unsecured credit agreements with a total value of R50 000 or less and receives no income or received an average gross monthly income of R7 500 or less for the preceding six months.
A consumer will not qualify if the aforesaid monetary thresholds are exceeded, a credit provider has already taken legal action (issued summons) against the consumer, the consumer is the subject of an administration or sequestration order, the consumer is a juristic person (such as a company or close corporation), or the agreement in question is a secured credit agreement.
Consumers who apply for or who are successful in seeking relief may not enter into further credit agreements for the period of the debt intervention order.
Pursuant to an order, the NCR must review the consumer’s circumstances eight months after the initial order to make recommendations to the NCT. Depending on the financial position of the consumer, the NCT is empowered to make further orders to relieve the over-indebtedness of the consumer.
Article by Coenie Bezuidenhout, candidate attorney of Lagarto Inc. Contact 011 568 9326, or email: coenie@lagartoinc.co.za
