Evaluation of effectiveness of debt review in terms of the National Credit Act 34 of 2005

Abstract

The National Credit Act (hereinafter the Act) introduced debt review to the Republic of South Africa in 2007. Debt review was introduced to provide debt relief to over-indebted consumers. The legislature was not able to foresee and address several implementation obstacles and accordingly courts are forced to assist in the interpretation of the Act. Courts have created some legal certainty, but there are different opinions on the correctness of these interpretational principles. This study will consider current precedents and whether the current precedents are in accordance with the intention of the legislature. Section 2 of the Act stipulates that Act should be interpreted to give effect to the purposes of the Act. The purpose of the Act is contained in section 3. One of the purposes of the Act is to promote equality between the rights of consumers and credit providers in credit agreements. This dissertation illustrates that the Act aims to achieve this equality of rights in the debt review process by the inclusion of countervailing rights in part D of chapter 4 of the Act. The legislature considered recommendations made by certain role players in the debt review process. Proposed amendments were published on 29 May 2013 in the Government Gazette for public consideration. These proposed amendments were considered in the scope of this study. The dissertation concludes that the proposed amendments need to be supplemented in order to ensure that debt review becomes and remains an effective debt relief measure for over-indebted consumers, without prejudice to the rights of credit providers.