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Not Over Indebted Applications

When a consumer applies for debt review and the matter has not been referred to the Magistrate’s Court, the only remedy available for a consumer to be removed from debt review, if no clearance certificate can be issued is by way of bringing a court application to declare him or herself not to be over-indebted anymore.

These applications are done when the consumer’s financial situation and the consumer can prove to the court that they are in fact no longer in financial trouble. These applications are quite new in the legal field hence the reason why there are so many contradicting judgments with each court following its own interpretation.

The biggest problem with these applications are jurisdiction.

‘there are so many contradicting judgments with each court following its own interpretation’

Challenge:

Many consumers debts are restructured via the National Consumer Tribunal (NCT) or perhaps their debt review matters never actually go to Magistrates Court (to be declared over indebted) before they are able to rehabilitate and leave the debt review process. Some consumers find that because the NCR told  Debt Counsellors that they can withhold their services from consumers who don’t pay (It is always best to pay for the service you are receiving), they can’t get help if they could actually leave debt review. The challenge for the consumer is trying to get the credit bureau status removed which indicates they are under debt review. This credit bureau status prevents them from accessing new credit. Also, many credit providers refuse to offer the consumer credit again until they send them a copy of their official clearance certificate – which some consumers can’t obtain for a variety of reasons.

 

 

Du Toit v Sager and Others

In a recent judgment of Du Toit v Sager and Others 16226/17 Western Cape High Court, J Thulare questioned the view that Debt Counsellors may withhold clearance certificates due to unpaid aftercare fees, the court further recommended that the consumer should have followed through on the process to apply to the tribunal.

It was further the Court’s view that a credit bureau should amend the debt review status if the consumer can prove to the credit bureau the change in financial circumstances. This, however, could cause more harm than good in the debt review industry, as it takes an expert to make such a determination.

‘there is nothing in the National Credit Act prohibiting a Magistrate Court from making a finding of not over indebtedness’

Finally, the High Court in para 25 confirmed if a Magistrate’s Court is given the jurisdiction to entertain proposals from a debt counsellor to re-arrange a consumer’s obligations it ought to have jurisdiction to make a finding of not over indebtedness. The High Court expressly confirmed in its judgment that there is nothing in the National Credit Act prohibiting a Magistrate Court from making a finding of not over indebtedness and that such powers of the Magistrate’s Court are in line with the preamble and the purpose of the National Credit Act.

Don’t Waste Money (And the High Court’s Time)

In the judgment, the court further pointed out that the Magistrate’s Courts are in general inexpensive when compared to High Courts and that one cannot simply just approach the High Court if not all domestic remedies have not been utilised and or exploited.

‘if a Magistrate’s Court is given the jurisdiction to entertain proposals from a debt counsellor …it ought to have jurisdiction to make a finding of not over indebtedness‘

The application was dismissed and the Applicant was ordered to file an application to the Magistrate’s Court for leave to apply for, and if granted such leave, to apply for the granting of an order that the applicant is not over-indebted.

It can be with all honesty be said that the above case will and should be tested in the Magistrate’s Courts as so many consumers are being prejudiced by not being able to remove the debt review flags from their status in cases where their matters have been referred to the National Consumer Tribunal or not referred to court at all.

‘so many consumers are ..prejudiced by not being able to remove the debt review flags from their status .. where their matters have been referred to the National Consumer Tribunal or not referred to court at all’

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Special Thanks

Article researched, co-authored and submitted by: Rynhardt de Lange of VA Attorneys and Conveyancers