The proposed debt intervention measure

Abstract

A debtor who chooses to enter the insolvency system can do so using either of three different pieces of legislation that regulate the natural person debt relief system in South Africa. These are the Insolvency Act 24 of 1936; the Magistrates’ Courts Act 32 of 1944; and the National Credit Act 34 of 2005. Although it is not the main aim of the Act, only the Insolvency Act offers a discharge to debtors from pre-sequestration debts, while the Magistrates’ Court Act and the National Credit Act merely offer a debt restructuring plan with no possibility of obtaining a discharge. These former Acts have overtime been argued to be of assistance to only mildly indebted consumers. Due to stringent access requirements, such as advantage to creditors’ in the sequestration procedure in terms of the Insolvency Act, no income no asset (NINA) debtors have over the years been discriminated against and cannot access the insolvency system. In response to the current discrimination of NINA debtors, a proposed debt intervention procedure contained in the National Credit Amendment Bill of 2018 has been put forward to alleviate the plight of such debtors. This study takes an in-depth look at the current natural person debt relief system and how it ostracises a certain group of debtors. This is achieved by among other things, juxtaposing it with international trends in the field of insolvency law. This study further examines the extent to which the proposed debt intervention procedure will possibly be of assistance to the currently ostracised debtors.