Amendments to credit act and impact on your life

Amendments to the NCA

 

The National Credit Act (NCA) provides over-indebted consumers with a number of options, including using a debt counsellor to help you restructure your debt and negotiate a deal with your credit providers. The NDMA urges you to make contact if you are struggling to keep up with your repayments. The first step is to talk to your credit provider. This is the best time to tackle your debt problems because temporary arrangements can be made to help you avoid defaulting without you having to incur any unnecessary costs or affecting your credit profile. At the same time you should look at your budget and see how you can cut down on unnecessary expenditure in order to pay off your debt. Remember that if you are in arrears on your payments and you have received a section 129 letter or any letter of demand, you have 10 days to act on the letter. If you do not understand the letter of demand, contact your credit provider for information.

 

Several amendments to the National Credit Act, 34 of 2005 were introduced by the Credit Amendment Act, 19 of 2014, published in the Government Gazette on 19 May 2014. This Amendment Act shall come into operation on a date fixed by the President by proclamation in the Gazette. No date has not been determined yet.

 

Main features of the changes influencing debt review as contained in the Amendment Act and the effects that it will have on debt counselling are:

 

Amendment Result
Section 129 NoticeDelivery defined.

 

Allows Consumer to include a debt where S.129 sent in Debt Review. After a Consumer received a Section 129 Notice the Consumer may apply for Debt Review within 10 days and that debt is included in the Debt Review. Consumer may approach a Debt Counsellor to process the Debt Review application within 10 business days to enable inclusion of that Debt.
Termination of Debt ReviewNo termination of Debt Review if the matter is referred to Court (S86(10)). Termination and legal enforcement may NOT be done if a Debt Review matter has been referred to Court. The Consumer remains protected. Debt Counsellor negotiates repayment plan with Credit Providers and refer the matter to Court before the expiry of 60 business days in order to protect the Consumer.
Terminated mattersAny Court is empowered to

reinstate a Credit Agreement

under Debt Review.

Where a Credit Agreement under Debt Review is terminated the Consumer may approach any Court (including Magistrate Court) to request resumption of Debt Review. Debt Counsellor may include request for resumptions of that Credit Agreement under Debt Review in application to Magistrate Court. This will save cost and time.
Affordability Assessments:Credit Providers to implement

prescribed Affordability

Assessment for new debt

Consumers will be required to provide more detailed information and may not spend more on debt repayments in guidelines. For example a Consumer with R1200 income per month will need R1200 for household expenditure. Result no debt. Debt Counsellors are obliged to check if Affordability Guidelines are followed for debt application after implementation date. If not Reckless Credit conditions may apply.
Service standards of DC’sImproved training.

Use of Agents restricted.

Voluntary deregistration process for Debt Counsellors.

Better defined service and protection for Consumers. Notice from DC of intention to deregister. Only Debt Counsellor may perform DC tasks. Support staff to be trained. Agents may only perform administrative tasks. Defined process on voluntary deregistration. Fees to be disclosed up front.
Registration of ADRCompulsory registration of all ADR’s with NCR. Consumers request proof of registration and may expect better protection. Conditions for registration to be issued by NCR. ADR’s may not offer Debt Review but it may be possible for DC’s to register as an ADR.
Registration of PDACompulsory to register as Consumer able to verify that PDA is registered. Consumer may select payment method. DC’s may only use registered PDA’s.
Reckless CreditEnhancing powers of NCT to

include Reckless Credit.

 

Defined process and reduced cost if reckless matters are referred to NCT. Consumer may refer potential reckless matters to the NCR. DC’s to refer potential Reckless Credit matters to the NCR who will investigate and where required refer potential matters to NCT. No DC or Consumer may approach NCT directly on this matter. NCR to issue Regulations regarding process to be followed.
Clearance CertificateWhen Clearance Certificate

must be issued.

Once short term debt is repaid and Consumer is up to date with home loan payments, a Clearance Certificate may be issued. DC must issue Clearance Certificate when short termdebt repaid and home loan payments are up to date.
Registration of CreditProviders

All Credit Providers have to

register with NCR.

Consumers to check if Credit Provider is registered and will enjoy better protection. All debt in future to reflect onCredit Bureau report. Ability to report Credit Providers to NCR when they fail to co-operate.
Prescribed DebtThe Act prohibits sale and

collection of Prescribed debt.

 

Debt that has Prescribed (normally 3 years) may no longer be collected by anybody. Identify Prescribed debt and donot include in Debt Review. Advise Consumer when debt is
Improved cooperationbetween Regulators Co-operation between all Regulators should be beneficial for Consumer. No direct effect on DC’s.
Adverse Consumer InformationRemoval of negative info relating to

slow payment and/or handed over

and/or written off debt.

 

When debt is repaid all negative info cleared. Where Judgment is in place and debt repaid – automatic removal ofJudgement information. No outstanding debt removed. DC’s to sell the benefits of this amnesty to Consumers. Consumers now in control to reduce debt and once repaid

automatic removal of negative information. Consumer who has repaid Debt under Debt Review will have clean record when Clearance Certificate issued.