DCASA Investigate Section 71 Inconsistencies
The National Credit Act allows consumers who are under debt review, who pay off all their smaller credit agreements, to leave debt review and continue paying off their large debt (such as a bond).
This change was made after it was realised that previously the wording of the NCA meant that a consumer who had a bond should stay in debt review until all debts were settled. This would then mean that consumers with a bond would potentially be in debt review for many years, possibly decades. Since this was clearly not the intention of the Act an amendment was made.
‘previously the wording of the NCA meant that a consumer who had a bond should stay in debt review until all debts were settled’
Now a consumer, who pays off their short term credit and perhaps a vehicle loan and is only left with a bond, can leave debt review and continue with reasonable payments towards their bond. They can then have the debt review status removed at the credit bureaus and can access credit again (if they can afford to do so).
The Debt Counsellors Association of South Africa (DCASA) is currently preparing a report on how effectively the various large banks are managing this process. There are some who say that the process is being inconsistently dealt with and some consumers are getting the short end of the stick.
Certain consumers who wish to make use of this provision are told to first leave debt review entirely and only then will the bank negotiate with them about the required monthly repayment amount. This poses a danger since once the consumer has left the safety of debt review then the bank could demand a much higher payment than the consumer can afford.
The purpose of the changes to the NCA was to make it easier and safer for consumers with bonds to make use of the debt review process to sort out their short term credit issues while keeping their assets safe. If some banks are now making requirements of consumers which threaten their assets this would be defeating the purpose of those amendments. DCASA hope that the report will help inform the NCR and industry and assist with future implementation of this Section of the NCA.
If you have any information which you would like to share with DCASA on this topic you are welcome to contribute towards their report by emailing: firstname.lastname@example.org