August 2012 issue: Debt Vader
In case you did not get a chance to read it yet. Here is the Debt Vader article from the August 2012 issue of Debtfree DIGI.
Amandla! Awetu!
Loosely translated means “Power! To us!, Amandla, Awetu! signified the call to equality and the fight against discrimination during the apartheid years. It seems South Africans have obtained that freedom only to promptly sell ourselves into slavery to the Banks. The Banks quickly swooped into what they described as a new market segment, the “previously disadvantaged” and sold them everything from credit cards and personal loans to mortgage bonds and asset finance. Why? Because it was an easy sale! Now years later the cat’s out the bag on unsecured lending and the effects that servicing these loans have on the average household are evident.
The DTI thought the answer was the NCA, which was intended to help the lower and middle income groups re-establish financial stability but which has instead labeled these well meaning consumers further. Consumer’s who enter the debt review system often face unimaginable discrimination by the judiciary, banks and even their own employers and real estate agents!!!
The judicial system discriminates against persons under debt review, because they see debt review as the consumer’s ‘last chance’ at rehabilitation. When a consumer is not in the debt review system and he defaults on a car payment, the bank calls him up and they arrange a double payment at the end of the next month. If he defaults again, he may even be given a second opportunity to correct the default and finally he will be issued with a Notice in terms of S129 informing him of his default, demanding payment and informing him that legal process is imminent. Some consumers can go for months and months without any action taken against them. Consumer’s under debt re-arrangement orders are not afforded the same courtesy. Should a debt review consumer default on even one debt review payment to a credit provider they immediately move to enforcement proceedings.
If a person has entered the debt review process but no debt re-arrangement court order is yet obtained, the credit provider will issue a S86(10) termination letter letting the consumer and the debt counsellor know that legal action is imminent. If a mistake has been made there is still time to rectify it before the matter reaches the courts and the consumer has to incurs huge legal costs.
However, once a consumer has obtained a debt re-arrangement order, no notice is required in terms of S88, thus the first time a consumer or his debt counsellor become aware of a ‘supposed’ default is when the Sheriff of the Court serves him a summons. More often then not, these terminations (that then result in a summons) are incorrect or premature from the creditors side and there is a reasonable explanation for any perceived default. Consumers who are under debt re-arrangement orders are not even given an opportunity to correct these mistakes and thus have to incur legal costs to defend the matter in court.
S66(1) of the NCA speaks to the protection of consumer rights: “a credit provider must not, in response to a consumer exercising, asserting or seeking to uphold any right set out in this Act …..
a) discriminate directly or indirectly against the consumer, compared to the credit providers treatment of any other consumer who has not exercised, asserted or sought to uphold such right.
b) penalize the consumer.
c) alter or propose to alter the terms or conditions of a credit agreement with the consumer, to the detriment of the consumer; or
d) take any action to accelerate, enforce, suspend or terminate a credit agreement with a consumer.
So here’s the question: The judiciary has gone on record stating that no notice is required in terms of S88. How does the judiciary and the banks explain their treatment of consumers under S88(3) of the NCA?
The banks have also discovered that Applications for Summary Judgments scare already anxious consumers into promising higher installments outside of the debt re-arrangement orders and this works well because if the consumer successfully opposes an Application for Summary Judgment, he gets leave to defend and the only cost order that can be made is that the costs of the Summary Judgment Application will be decided once the trial has been decided. The banks have no intention of going to trial so the consumer has to pay his attorneys and advocates. This amounts to thousands of Rands which the banks know they do not have.
Being under debt review can also place a stigma on consumers seeking a means to responsibly manage their finances. Applying for a new job can be a nightmare, because uninformed potential employer’s who do credit checks see the person is under debt review and might view them as risky employees. Incorrectly thinking they are more likely to steal or that they will take more leave days to sort out their financial issues and ultimately that they will be less productive employees. Real estate agents are somewhat more circumspect in their discrimination against persons under debt review. Imagine the situation where a consumer loses his home and now needs to rent. Often estate agents will not rent a home to them because they also do credit checks and once they discover that a consumer is under ‘debt review’ the premises is suddenly no longer on the market. “Sorry”!
This kind of discrimination reeks of the old South Africa. Unfair legal process? Can’t live were you want? Can’t get the job you are qualified for? Is this perhaps the new era of “banking apartheid” ?
