New Debt Relief Bill South Africa
The new debt relief bill passed in South Africa is aimed at providing financial help to over-indebted consumers.
This National Credit Amendment Bill, also known as the “Debt Intervention Bill”, aims to help low income earners get relief from their mounting debt pressure.
In some of the most extreme cases, the debt relief bill provides for consumers to have all their debt written off.
However, the debt relief bill aims to help you those who are over-indebted, earn less than R7,500 a month and have unsecured debt of no more than R50,000.
Furthermore, the debt relief bill passed by President Cyril Ramaphosa, signing the National Credit Amendment Bill into law, allows for debt intervention.
This involves debt restructuring by not only giving consumers five years to pay, but also writing off all their debt in certain cases.
FAQs – What Is the Debt Relief Bill South Africa
Whilst the new debt intervention bill is aimed at protecting over-indebted consumers from reckless lenders, banks can’t just write off their customers’ debt.
Therefore, there are many questions still to be answered regarding the impact of the bill on those looking for debt relief and the banks’ & retailers’ credit agreements.
What is the debt relief bill?
The new debt relief bill passed is a debt intervention measure for low-income, over-indebted consumers, signed into law by President Cyril Ramaphosa.
Not only does this new credit amendment bill promise to write off debt for low income and unemployed consumers who are over-indebted, but it also aims to restructure their debt repayment plan to provide relief from their pressure of debt.
How do I apply for debt relief bill in South Africa?
Your application for debt relief would be processed by the NCR which would then be submitted to the National Consumer Tribunal (NCT).
It should be noted that as of writing this post, the NCR isn’t yet ready to begin accepting and processing applications.
Can I apply for debt relief while under debt counselling?
If you are under debt review, in debt counselling, have been sequestrated or you have an administration order, you will not qualify for debt intervention.
Will my debt be written off?
No, a debt relief applicant’s debt will only be written off as a last resort.
The debt intervention process would have to be fully completed before the tribunal would make the decision to write off a consumer’s debt.
How is the debt intervention process different to debt counselling?
This is process is the same in that it aims to provide debt intervention to over-indebted consumers.
However, with debt relief you would not have to pay for a debt counsellor, nor would you enjoy the benefits of having a counsellor as you would during counselling.
Who qualifies to have their debts written off?
If you are found to have no income or assets of value, the regulator will recommend that your debts be suspended for 24 months with the view that your financial situation may improve sufficiently to allow you to be able to pay your debt.
Furthermore, during the period of your debt being suspended, the interest and fees applied to your debt will also be frozen so that the amount owing does not increase.
If after 24 months there has been no improvement in your financial situation & you have not secured employment, then the regulator will apply to the tribunal for your debts to be written off.
What are the benefits of the debt intervention bill?
This debt intervention process will allow the NCR to assist anyone who is over-indebted by assessing whether you are able to pay off your debts by rearranging your debt.
This would help you by allowing you to pay a reduced monthly installment over an extended period of no more than five years, removing some of the stress of debt.
Who can apply for debt relief in South Africa?
Over-indebted consumers whose monthly income is less than R7 500 and who have less than R50,000 in unsecured debt can apply.
This also includes unemployed people, who fulfill the above criteria, who have no reasonable prospect of securing employment within 24 months.
Can I apply for loans or credit?
Once you’ve applied apply for debt relief you may not enter into any type of new credit agreement, other than for a consolidation loan. The same applies to getting loans while under debt review.
However, if your application was not approved as you were found not to have been over-indebted, you would not be restricted from applying for more credit.
What legal protection will debt intervention provide?
Under this type of debt intervention you will be protected against possible legal action from your creditors.
However, you will not have this protection if your debt relief application was rejected or you defaulted on your debt rearrangement payment plan.
Also, if you somehow entered into a credit agreement, the loan will be considered reckless lending and you will not enjoy the protection of legal action from that particular agreement & creditor.
If my debt is extinguished will my creditors be able to pursue it?
Once a credit agreement is extinguished under this debt intervention, your creditor may not legally enforce any of the terms or rights that you agreed to under that agreement.
What if I don’t provide accurate information on my application?
Should you furnish false information on your debt relief application, you will be subject to a fine or imprisonment for no longer than two years. or both.
You will also be permanently prohibited from applying for debt relief at any time in the future no matter how over-indebted you may be.
What can I do if my application for debt relief is rejected?
If your application is rejected, you may approach the magistrate court to have your credit commitments rearranged to reduce your stress of debt.
Conclusion On the the Debt Intervention Bill
Despite the process not being fully functional yet, nobody should expect to have their debts written off under the new debt relief bill South Africa just yet.
Whilst no commencement date for this legislation has been published, you could be placed in a form of debt review, administered by the National Credit Regulator (NCR), instead of having your debts extinguished if your application for debt relief was successful.
On a positive note, for over-indebted consumers, The NCR’s company secretary, Lesiba Mashapa, said the regulator has submitted its plans and proposed budget for implementing this Act to the department.
Whilst he didn’t provide the exact details of the plans, Mashapa did say that the plans outline channels that would enable consumers to apply for debt intervention at the NCR “from where they are”.
On the other hand, the debt relief bill could allow debt to be expunged, which creates significant uncertainty for credit providers which could ultimately make it more difficult for consumers to get credit in future.