Debt relief in terms of the National Credit Act 34 of 2005

Abstract

The National Credit Act 34 of 2005 (“NCA”), the legislative enactment regulating the credit industry, provides debt relief mechanisms (in addition to the other laws, (Insolvency Act-sequestrations and Magistrates’ Courts Act-administrations) to natural person consumers. The original NCA introduced debt review in the South African credit laws, in terms whereof an over-indebted credit consumer subject to the NCA can apply to a debt counsellor for the review of his or her debt, and the eventual re-arrangement of the debt by a court. This process is too expensive for the less affluent consumer and only caters for the needs of mildly-indebted consumers. Additionally, their income or assets do not merit the economic feasible re-arrangement of their debts. The debt review process does not afford a discharge of pre-debt review debts. Consequently, the National Credit Amendment Act 7 of 2019 (“NCAA 2019”) was promulgated (but not put into effect yet) with the aim to address the plight of these no-income-no-asset (“NINA”) or low-income-low-asset (“LILA”) consumers, and to provide them with an alternative debt relief mechanism to debt review. The NCAA 2019 when it becomes effective introduces debt intervention into the NCA. This dissertation investigates and compares debt review and debt intervention, the latter permitting the consumer’s debt eventually be extinguished.