Abstract:
One of the purposes of the National Credit Act 34 of 2005 (NCA) is to protect consumers by inter alia providing mechanisms for resolving overindebtedness (see s 3(g)). Section 86 of the NCA provides for such measure in that it allows a consumer to apply to a debt counsellor to conduct a debt review of the credit agreements to which he is a party and to be declared over-indebted (s 86(1)). One of the first steps in the debt review process is therefore, a determination by the debt counsellor whether the consumer is over-indebted, likely to become over-indebted, or not over-indebted at all (s 86(6) and (7)). Where the debt counsellor concludes that the consumer is indeed over-indebted, section 86(7)(c) requires of the debt counsellor to issue a proposal recommending that the Magistrate's Court make an appropriate order to declare one or more of the consumer's credit agreements to be reckless credit (if applicable) and/or to re-arrange or restructure the consumer's obligations. In terms of section 86(8)(b) the debt counsellor is also obliged to refer the recommendation to the Magistrate's Court for a hearing under section 87 (see the interpretation of the relevant sections in National Credit Regulator v Nedbank Ltd 2009 6 SA 295 (GNP) 303 and 304).
