The National Credit Amendment Bill promises debt relief for the poor



A bill that promises to offer some relief for indebted South African consumers including extinguishing debt for those special cases, has been adopted by the Portfolio Committee on Trade and Industry.

The National Credit Amendment Bill was drafted by the African National Congress (ANC) Study Group on Trade and Industry with a stated aim of “providing debt relief intervention for the marginalised poor.”

The bill seeks to introduce amongst other things debt intervention measures specifically designed for low income consumers who are over-indebted. This special debt review measure should be administered and processed by the National Credit Regulator. Its services should be free for the targeted group and lead to orders issued by the National Consumer Tribunal.

The Bill also promises “a short-term intervention that allows for the extinguishing of debt for those consumers who are either unable to pay their debts at all or to repay all the debt within 60 months. This intervention will be available for 4 years after the implementation of the Bill.” This could be seen as another chapter of credit amnesty after the 2014 version.

In a statement released this week the ANC said “This was motivated by the fact that the South African natural insolvency system remained largely creditor-oriented and excludes the poor from the process, which is contrary to international trends and best practice.”

The statement said “the current statutory measures offering debt relief (sequestration; administration and debt review) require some form of disposable income or assets that limit access by the poor on financial grounds. The ANC was of the view that this constitutes unfair discrimination based on socio-economic status and also undermines the dignity of affected consumers. These exclusions accordingly affect the equal enjoyment of rights as envisaged in Section 9 and the right to dignity as envisaged in Section 10 of the Constitution.”

To qualify for the debt extinguishing measures consumers must not have more than R50 000 unsecured debt, and earn no more than R7 500.

The Bill also gives additional powers to Magistrate Courts to lower interest rates based on a debt counselor’s recommendation on behalf of a debt review applicant.

The ANC said “We believe that this piece of legislation takes us a step closer in addressing legislative gaps that limit access to debt relief measures for the marginalised poor.”

Report by PBM

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