Debt review : the termination and revival thereof

Abstract

The National Credit Act1 has brought about significant changes to the South African credit market. Amongst these changes are the provisions that introduced concepts such as ?over-indebtedness? and ?reckless credit?, as well as the provisions that implemented a new alternative debt relief measure into our law. Section 86 of the NCA introduced the debt review process in terms whereof an over-indebted consumer can voluntarily apply to a debt counsellor to be placed under debt review with regard to credit agreements that fall within the scope of application of the NCA.2 Upon receipt of a consumer application, a debt counsellor will proceed to conduct an assessment of the consumer?s financial means, prospects and obligations with the aim of ascertaining whether or not the consumer is indeed over-indebted. During this period of assessment, a moratorium becomes operative which restricts the right of credit providers with whom the consumer has a credit agreement, subject to debt review, to proceed with debt enforcement proceedings against the defaulting consumer. Only once the prescribed period of 60 business days has lapsed,3 but before the matter is filed at court, may the credit provider terminate the debt review and consequently proceed with debt enforcement proceedings. Although the NCA affords credit providers the right to terminate a debt review this right is however not absolute, as the NCA also affords consumers with the opportunity to apply for the revival of the terminated debt review. Consequently, it will be up to the court hearing such an application for revival to make a ruling. The legislature, however, failed to include into the NCA detailed procedural rules and guidelines in respect of the debt review process, more specifically in respect of the termination procedure. This oversight of procedural rules and guidelines by the legislature has proven to be very problematic and has resulted in a vast range of conflicting judgments by our courts. This dissertation aims to analyse the procedural issues pertaining to the termination procedure, in its original and amended forms, as well as the reinstatement procedure. These issues will be discussed and inferences will be made. Recommendations will also be provided in the hope of contributing to streamlining the debt review process and in particular the termination and revival procedures.