Gauteng Court Shuts Down Attempt To Bail on Debt Review
Court Says No To Attempt To Leave Debt Review
You may have seen adverts on social media saying you can ‘get out of debt review’ and have your court order set aside.
Most are scams but even when somewhat legitimate it is important to know many courts will not allow you to bail on your debt review.
Why You May Not Be Able to Rescind an NCT Order
Many debt review matters are sent to the National Consumer Tribunal.
This is because the costs at tribunal and turnaround times are cheaper and faster than going to court. This saves consumers funds and gives them security faster. Both of which are great and in line with the purpose of the National Credit Act (NCA).
A matter can only be sent to the NCT in line with NCA Section 86(7)(b). Also, this is only possible when all the consumer’s credit providers are happy with the proposal made.
If a proposal is made by the Debt Counsellor and all the consumers credit providers are happy with the proposal the NCT is willing to offer a Consent Order. This has the same force as a High Court Order and all parties have to stick to the order.
If however serious mistakes were made or significant information was missing at the time when the order was granted the NCT later has the option of possibly setting aside or rescinding an order.
Common Stratergies For Trying To Get Out of an NCT Order
Many attorneys who offer “get out of debt review” services try the same things at court, over and over, to try remove a debt restructuring court order.
One strategy is to argue that the consumer’s consent order was granted when they were not at court (with the NCT).
Another way is to argue that the consumer was already ‘over indebted’ and so section 86(7)(b) of the National Credit Act does not apply to the consumer. If the application for a consent order was made in terms of S86(7)(b) then they argue the order should not have been made.
NCT Shut Down Such Attempts
A long time ago the NCT let one or two such cases go through and rescinded the consent orders.
In those particular cases, it seems the consumer should not have been placed under debt review and the NCT agreed. Some people who now want to get out of debt review have thought these old arguments might also work for them.
‘the NCT has taken a firm stance against such strategies by people offering ‘get out of debt review’ services’
Since then, however, the NCT has taken a firm stance against such strategies by people offering ‘get out of debt review’ services.
This is because most of the time the consumer signed forms specifically asking the Debt Counsellor or their attorney to go to court or the NCT on their behalf and knew that this would be done to help with their debt review. So, even though they were not there in person, their agent or duly appointed representative was on their behalf for debt review.
Also, the NCT has previously publicly shared that they feel that a consumer is not technically or legally over indebted until a determination is made at court (or by tribunal). They may appear to be over indebted to the Debt Counsellor considering their matter but it is not confirmed until ruled on.
The NCT also feel that it is in consumers’ best interests to have access to the most affordable cost option where all credit providers are happy to consent to a change. They feel this is in line with the purpose of the NCA.
Pretoria High Court Agrees
In a recent court case involving a consumer who was trying to get out of their NCT order for debt review, the NCT refused to over turn their past consent order.
Not satisfied with this finding the consumer then approached the High Court to ask them to over turn the debt review ruling that the NCT granted.
The application was unsuccessful for a number of reasons.
Not Present But An Agent Was
The consumer argued that they were not at the NCT when the order was granted but the court (like the NCT had previously) ruled that they had signed forms asking the Debt Counsellor and Attorney to take the matter to the NCT.
The Purpose or Debt Restructuring Consent Orders
The Court also looked at why such consent orders are made pointing out that they are made in line with the purpose of the National Credit Act.
So, rather than niggle about which section is applicable, the purpose is to help the consumer when everyone is happy to make a consent order.
(see extract from ruling below)
The NCT Doesn't Actually Have To Rescind
The High Court ruling delved into the wording of the law and pointed out that the NCT ‘may’ rescind orders but does not have to rescind past orders even when there are legitimate issues. Its up to them.
(see extract from ruling below)
The Courts Want People To Pay Off Their Debt Review Debts
Rather than try over turn existing debt review court orders (incl. consent orders from the NCT), the court would like to see people pay off their debts and stick with the process.
Granting such get out of debt review applications could defeat the purpose of the Act. They do not want to open the floodgates to people who just want to duck out of their debt obligations.
(See extract from the ruling below)
Download the Case
Want to read the full ruling?
You can download and read it below. It is 7MB in size.
MB Sithole v B Sager and Others – A369_2023 21 Jan 2025 Gauteng
Rather Stick With The Process
If you have started debt review then try to complete the process even if it is tough.
If you want to drop out of the process please educate yourself about all the very negative consequences of doing so and please realise you will still have to pay all your debts before accessing more credit.
Here is some info about get out of debt review scams and how to avoid them
