Perspectives on the termination of debt review in terms of section 86(10) of the National Credit Act 34 of 2005

Abstract

The National Credit Act 34 of 2005 (the NCA) aims to address and prevent the over-indebtedness of consumers and to provide mechanisms for resolving over-indebtedness based on the principle of satisfaction by the consumer of all his obligations. In this regard it provides inter alia for the mechanism of debt review, during which a debt counsellor reviews the debt situation of a consumer in order to determine if the consumer is over-indebted and to attempt to assist the consumer in obtaining debt relief in the form of a consensual debt re-arrangement agreement or court-ordered debt re-structuring. A pending debt review has serious consequences. It bars a consumer from entering into further credit agreements and creates a moratorium on debt enforcement by the credit provider. However, a debt review in terms of section 86 does not end or lapse automatically if a specific event fails to occur or upon the expiry of a specific time period. Before a credit provider can enforce a credit agreement that is the subject of a pending debt review, the debt review must be terminated in accordance with section 86(10) and certain other requirements must be met. If a debt review is incorrectly terminated in accordance with section 86(10), the enforcement proceedings instituted thereafter will be unlawful and premature. In practice the debt review process - and specifically the termination thereof - are problematic as there appears to be uncertainty, as a result of the sparse provisions of section 86(10), regarding exactly when a debt review can be terminated. Uncertainty exists regarding the scope of a debt review and whether it should be afforded a narrow or broad interpretation, which will inevitably affect the cut-off date for termination. This article attempts to address some of these issues.