Debt relief for South African NINA debtors and what can be learned from the European approach

Abstract

The focus of this article is on the international trend of providing debt relief to all hopelessly insolvent individuals, so allowing them a fresh start. Such debtors include those with ‘no income and no assets’ (NINA), whose access to insolvency proceedings would yield no benefit for their creditors. The initial ultra-liberal American ‘straight discharge’, or ‘fresh start’, is contrasted with the ‘earned fresh start’ approach in Europe. The European approach is investigated in some detail and key elements in the German and French consumer-insolvency systems are specifically considered, as these systems respectively illustrate the traditional and the new European approaches to providing debt relief to NINA debtors. Internationally regarded principles and guidelines are considered as a subtext. The purpose of the investigation is to ascertain whether there are any lessons to be learnt by South Africa from the European approach, and to indicate a way forward for future law reform as regards debt-relief measures for NINA debtors. The research concludes with an evaluation of the different approaches within the South African context and offers some remarks on the way forward.