Role of the magistrate

NEGOTIATION AND SETTLEMENT AGREEMENTS

 

The NCA provides for negotiations to re-arrange repayment of agreements only in the event of a finding that the consumer is not over-indebted but is experiencing, or is likely to experience, difficulty satisfying all his obligations in time. Nothing prevents the debt counsellor, the consumer and credit providers from entering into negotiations in the case of an over-indebted consumer whose matter has been referred to the court. Such negotiations, however, are not prescribed by the Act, and the content of these mutual agreements are determined by the concerned parties – these are called Settlement Negotiations. A settlement agreement may be confirmed by the Magistrates Court.

 

THE POWERS (MANDATE) OF THE MAGISTRATE’S COURT

 

Where the debt counsellor found the consumer to be over-indebted and referred the case to a Magistrates Court, making a recommendation in the form of a proposal, the Magistrate’s Court must conduct a hearing and, having regard to the proposal and information before it and the consumer’s financial means, prospects and obligations, may reject the recommendation or application as the case may be. The Magistrates Court may make an order re-arranging one or more of the consumer’s obligations by extending the repayment period (which reduces the payments due), or by postponing the dates on which payments are due or by extending the period AND postponing dates on which payments are due.

The Magistrates Court should address the over-indebtedness of the consumer. It may accept the recommendation of the debt counsellor or formulate another payment plan. The court may reject the recommendation of the debt counsellor and notwithstanding, proceed to make an order.

 

RECKLESS CREDIT GRANTED

 

Where the credit provider failed to conduct an assessment, or where the consumer did not generally understand or appreciate his risk, costs or obligations

 

The Magistrates Court may make an order declaring any credit agreement to be reckless. If a court declares that a credit agreement is reckless in that the credit provider failed to conduct an assessment, or where the consumer did not generally understand or appreciate his risk, costs or obligations, the Magistrates Court may set aside all or part of the consumer’s rights and obligations under that agreement as the court determines just and reasonable in the circumstances OR suspend the force and effect of that agreement until a date determined by the court when making the order of suspension IF at the time of the court proceedings, the consumer is over-indebted.

 

 

Where the credit provider concluded an agreement which made the consumer over-indebted

 

If a credit provider concluded an agreement which made the consumer over-indebted, the Magistrates Court MUST further consider if the consumer is over-indebted at the time of the court proceedings and may make an order to suspend the force and effect of that agreement until a date determined by the court when making the order. The Magistrates Court may restructure the consumer’s obligations by re-arranging one or more of the consumer’s obligations by extending the repayment period (which reduces the payments due), or by postponing the dates on which payments are due or by extending the period AND postponing dates on which payments are due.

 

Before making an order where the agreement made the consumer over-indebted, the Magistrates Court MUST consider the consumer’s current means and ability to pay current financial obligations that existed at the time the agreement was made, AND the Magistrates Court must consider the expected date when any such obligation under a credit agreement will be fully satisfied assuming the consumer makes all required payments in accordance with any proposed order.