The role debt intervention in South African insolvency law

Abstract

A focal point of this dissertation is to unpack the South African natural person insolvency law through specific consideration of the effectiveness of the debt intervention measure. It is evident that there is a myriad of access requirements for debt relief measures in South Africa. A debtor ought to be in possession of either assets or income in order to trigger the various procedures. Thus, an absence of assets or income consequently operates as a bar to entry of the debt relief measures currently in place. More recently, the National Credit Amendment Act introduced the debt intervention measure whose primary objective is to extend a form of statutory recourse to vulnerable consumers that are currently excluded from formal debt relief measures by way of making provision for debt restructuring and a payment plan. The World Bank Report on the treatment of natural persons essentially functions as a guiding tool in the development of an insolvency regime through outlining characteristics of an effective regime for natural persons as well as the challenges which may flow from the development thereof. The Report will therefore be considered for the purposes of this study. This study aligns with the United Nations’ Sustainable Development Goal 1 which seeks to end poverty in all its forms by promoting social protection systems and ensuring equal access to economic resources. The analysis of South Africa’s natural person insolvency law, particularly the debt intervention measure reflects these objectives by addressing the exclusion of vulnerable consumers from traditional debt relief mechanisms. The creation of a statutory pathway for individuals without assets or income to restructure debt and implement payment plans functions as a social protection tool that mitigates the risk of deepening poverty caused by over-indebtedness. In doing so, it advances the United Nations’ Sustainable Development Goal 1’s commitment to reducing vulnerability to economic shocks and fostering financial inclusion for vulnerable consumers.