A consideration of the proposed debt intervention procedure from a debt-relief perspective

Abstract

There has been a worldwide trend to move away from creditor-centric insolvency regimes to ones that are more accommodating of debtors. Many debtors land up in a spiral of debt from which they cannot escape without some form of statutory debt relief. There are three debt relief measures available in South Africa, of which only one, the sequestration under the Insolvency Act, provides a discharge from debt, which is the ultimate debt relief. However, the requirement of an advantage to creditors restricts access for many debtors who do not have the financial means to access the procedure. Both debt review under the NCA and an administration order under the Magistrates' Courts Act, have differing, restrictive requirements and provide only for a re-arrangement or rescheduling of debt repayment. No discharge from debt is granted. The National Credit Amendment Bill, 2017 proposes the introduction of a debt measure known as debt intervention. The measure is aimed at providing debt relief for debtors who are otherwise excluded from the debt relief measures available. In this dissertation, this Bill is examined to ascertain what debt intervention entails. The Bill proposes that the duties of the NCR be amplified to include the assessment of debt intervention applications administratively and the referral of applications to the Tribunal. The Tribunal will be empowered to amend and suspend debt repayments, including capital and costs and importantly, the Tribunal will be authorised to extinguish a debt in its entirety if it is determined that the debtor cannot meet his obligations in the time determined. This dissertation studies the provisions of the Bill relating primarily to how and to whom access to the debt intervention measure will be granted as well as the debt relief the measure will provide. The Bill is compared to the existing debt relief measures available in South Africa and also measured against international principles and guidelines as contained in two international studies. The study identifies areas of innovation and uncertainty in the debt intervention measure proposed in the National Credit Amendment Bill and considers the value of the measure to the South African debt relief arena.