The National Credit Amendment Bill was signed into law in August 2019.
The Bill promotes the use of a fair, transparent, competitive, sustainable, efficient, effective and accessible credit market and greater relief to over-indebted consumers by providing a mechanism for, amongst other things, debt intervention.
The NCA introduced a debt review process as an alternative mechanism to sequestration.
Debt counselors would assist consumers by renegotiating interest rates with credit providers and extending repayment terms. This process is important for consumers as they are prohibited from consolidating existing debt or obtaining further credit once placed under debt review.
Due to the costs involved in the debt review process, there are categories of low-income earning consumers who are unable to access the debt review process or current insolvency measures. The Amendment has introduced the concept of debt intervention.
To qualify for debt intervention in terms of the Bill, the applicant must meet the following requirements:
- The applicant must have accumulated debt of not more than R50 000;
- The debt must have arisen under unsecured credit agreements, unsecured short-term credit transactions and/or unsecured credit facilities; and
- The applicant must receive no income, or if the applicant does receive an income (regardless of the source, frequency or regularity), the gross income may not exceed an average of R7 500 a month for the preceding six months.
If the applicant meets the requirements for debt intervention but fails to have sufficient assets or income to satisfy its re-arranged obligations, the NCR must refer the matter to the National Credit Tribunal (“Tribunal”).
The Tribunal is empowered to suspend all of the applicant’s obligations in terms of the qualifying credit agreements in part or full for a period of 12 months and may be extended for a further 12 months.
The Bill also provides the Tribunal with the power to expunge qualifying consumers from their debt obligations.
Additionally, the Bill also gives the National Credit Regulator significant powers to suspend reckless credit agreements.