From the application date, after the expiry of a period of 60 business days a credit provider may terminate an account that is in arrears from the debt review process. The consumer must be in default with the credit agreement to be terminated. This implies that the credit provider can after termination proceed with legal action to enforce the rights in terms of that credit agreement.
The NCA determines that “If a consumer is in default under a credit agreement that is being reviewed in terms of this section, the credit provider, in respect of that credit agreement, may give notice to terminate the review at any time, at least 60 business days after the date on which the consumer applied for the debt review.”
The purpose of Section 86(10) of the Act appears to be to allow the credit provider to insist on timeous compliance by the debt counsellor with the debt review timetable and to afford it the right to pursue recovery proceedings if there is a failure to efficiently comply with the debt review process.
As soon as debt review is terminated by a credit provider in accordance with Section 86(10) then the protection the consumer enjoyed in terms of the NCA, comes to an end.
The purpose of the debt review is not to relieve the consumer of his obligations but to achieve either a voluntary debt re-arrangement or a debt re-arrangement by the Magistrate’s Court. The purposes of the NCA include the promotion of responsibility in the credit market by encouraging responsible borrowing, avoidance of over-indebtedness and fulfilment of financial obligations by consumers’. Its approach to over-indebtedness is ‘based on the principle of satisfaction of all responsible consumer obligations’. By providing for a consistent and harmonised system of debt restructuring the NCA ‘places priority on the eventual satisfaction of all responsible consumer obligations’. It follows that the NCA serves not only the interest of consumers: itsconstruction calls for a careful balancing of all relevant interests.
If the consumer is in default the consumer is entitled to a 60 business days’ moratorium during which time the parties may attempt to resolve their dispute.
Over-indebtedness is not a defence to an application for summary judgment on the merits. A court has an over-riding discretion to refuse an application for summary judgment. It would be proper for a defendant to raise termination of the debt review by reason of the credit provider’s failure to participate or its bad faith in participating when application for summary judgment is made. These issues may be raised, not as a defence to the claim, but as a request to the court not to grant summary judgment in the exercise of its over-riding discretion. Sufficient information on which the request for a resumption of the debt review is based must be placed before the court.