scholarly journals DEBT COUNSELLING V DEBT ENFORCEMENT: SOME PROCEDURAL QUESTIONS ANSWERED BMW Financial Services (SA) (Pty) Ltd v Donkin 2009 6 SA 63 (KZD)

Obiter ◽  
2021 ◽  
Vol 31 (3) ◽  
Author(s):  
Corlia van Heerden ◽  
Hermie Coetzee
Keyword(s):  
South African ◽  
Financial Services ◽  
Consumer Credit ◽  
Debt Relief ◽  
Novel Approaches ◽  
Debt Enforcement ◽  
National Credit Act

The National Credit Act 34 of 2005 (hereinafter the “NCA” or “Act”) is an innovative but challenging piece of legislation. It provides for various novel approaches to debt enforcement in respect of credit agreements and has introduced debt-relief measures in respect of over-indebtedness and reckless credit that are new to South African consumer credit legislation. It is thus inevitable that in applying the provisions of the Act various issues will arise that will require interpretation and, therefore, intense scrutiny. In the recent judgment of BMW Financial Services (SA) (Pty) Ltd v Donkin, Wallis J was required to scrutinize various aspects relating to debt review and debt enforcement in order to decide the consumer’s fate as influenced by the NCA (66; and see also s 130(1)(a)).

scholarly journals Prescription of Debt in the Consumer-Credit Industry

2019 ◽  
Vol 22 ◽  
pp. 1-35
Author(s):  
Michelle Kelly-Louw ◽  
Philip Stoop
Keyword(s):  
South African ◽  
Consumer Credit ◽  
Law Reform ◽  
Legal Certainty ◽  
Specific Time ◽  
Time Periods ◽  
Credit Agreement ◽  
The Impact ◽  
National Credit Act ◽  
The Relationship

A person may acquire rights or be released from obligations through the passage of time. This is known as prescription. The objective of prescription is to achieve legal certainty and finality in the relationship between a debtor and a creditor, with the focus on protecting a debtor (consumer) against the unfairness of having to defend old claims. Old claims are therefore after the elapsing of specific time periods extinguished through prescription. A debtor must then specifically raise prescription as a defence against claims from creditors based on prescribed debts. The prescription of consumer debts is regulated by the National Credit Act 34 of 2005 (when the credit agreement falls under the NCA) and the Prescription Act 68 of 1969. The Prescription Act generally regulates all aspects of the prescription, which would also include consumer debts, while section 126B of the National Credit Act regulates and prohibits certain practices related to prescription, such as the selling of prescribed consumer debts or the continued collection or re-activation of prescribed consumer debts. In this article several practical aspects related to prescription and the National Credit Act are discussed, such as the impact of non-compliance with section 96 and section 129(1)(a) of the NCA on prescription. Section 126B is specifically analysed, and the question whether section 126B absolutely prohibits certain abusive practices related to the prescription of consumer debts is answered. Several shortcomings of the current legislation are also pointed out. In this article some aspects of the draft Prescription Bill proposed by the South African Law Reform Commission are also considered. In particular, we focus on the impact the Bill may have on the consumer-credit industry.  

scholarly journals Sink or Swim? Debt Review's Ambivalent "Lifeline" ... a Second Sequel to "… A Tale of Two Judgments" Nedbank v Andrews (240/2011) 2011 ZAECPEHC 29 (10 May 2011); Firstrand Bank Ltd v Evans 2011 4 SA 597 (KZD) and Firstrand Bank Ltd v Janse van Rensburg 2012 2 All SA 186 (ECP)

2017 ◽  
Vol 15 (4) ◽  
pp. 189
Author(s):  
Lienne Steyn
Keyword(s):  
South African ◽  
Debt Relief ◽  
The South ◽  
Consumer Debt ◽  
Section 8 ◽  
Relief System ◽  
National Credit Act ◽  
Statutory Regulation ◽  
Stated Purpose

The interface between the National Credit Act 34 of 2005 and the Insolvency Act 24 of 1936 has been the object of our courts' attention in a number of recent cases including Ex parte Ford and Two Similar Cases 2009 3 SA 376 (WCC), Investec Bank Ltd v Mutemeri 2010 1 SA 265 (GSJ), Naidoo v ABSA Bank Ltd 2010 4 SA 597 (SCA) and, more recently, Nedbank v Andrews (240/2011) 2011 ZAECPEHC 29 (10 May 2011), FirstRand Bank Ltd v Evans 2011 4 597 (KZD) and FirstRand Bank Ltd v Janse van Rensburg 2012 2 All SA 186 (ECP). The question raised in all of the three most recent cases was whether or not a debtor's application for debt review in terms of the National Credit Act constitutes an "act of insolvency" in terms of section 8 of the Insolvency Act, upon which a creditor may rely in an application for the compulsory sequestration of the debtor's estate. If it does, it would mean that by resorting to the debt relief measures provided by the National Credit Act a debtor commits the very act on which a creditor may base an application for a sequestration order which, if granted, will render the debtor's estate insolvent and bring about the liquidation of his assets. From the debtor's perspective, this is probably precisely the situation that he seeks to avert by applying for debt review. Further, sequestration would frustrate the stated purpose of the National Credit Act, which is that debtors should take responsibility for their debts by satisfying them in full. Concurrent creditors might also ultimately receive a dividend which falls far short of what is due to them.The question of whether a debtor's resorting to debt review may or should be the very act that triggers his estate's sequestration and its attendant consequences is an important issue, the treatment of which impacts significantly on the efficacy of the South African consumer debt relief system. This article analyses the most recent judgments and considers whether or not statutory regulation of the position is required.

Relieving Consumer Overindebtedness in South Africa: Policy Reviews and Recommendations

2017 ◽  
Vol 28 (2) ◽  
pp. 235-246 ◽  
Author(s):  
Ralph Abbey Ssebagala
Keyword(s):  
South Africa ◽  
South African ◽  
Large Fraction ◽  
Idiosyncratic Risk ◽  
Debt Relief ◽  
Consumer Debt ◽  
Comprehensive Review ◽  
Discharge Mechanism ◽  
National Credit Act

A large fraction of South African consumers are highly leveraged, inadequately insured, and/or own little to no assets of value, which increases their exposure not only to idiosyncratic risk but also to severe indebtedness and/or default. This scenario can present negative ramifications that lead well beyond the confines of individual households. Thankfully, it can also be remedied by well-tailored legal debt relief mechanisms. This article reflects on the uncertainties surrounding the consumer debt relief framework of the National Credit Act in an attempt to show why it is not up to the challenge of providing meaningful relief to debt-distressed consumers. Ultimately, a comprehensive review of the current framework in favor of a discharge mechanism on simple, stated terms is proposed.

scholarly journals ENFORCEMENT OF A CREDIT AGREEMENT WHERE THE CONSUMER HAS APPLIED FOR DEBT REVIEW IN TERMS OF THE NATIONAL CREDIT ACT 34 OF 2005 First Rand Bank v Smith (unreported case number 24208/08 (WLD))

Obiter ◽  
2021 ◽  
Vol 30 (2) ◽  
Author(s):  
Melanie Roestoff
Keyword(s):  
Review Process ◽  
Consumer Credit ◽  
Debt Relief ◽  
Working Relationship ◽  
Newspaper Report ◽  
Role Players ◽  
Counselling Process ◽  
Credit Agreement ◽  
National Credit Act ◽  
Case Number

Section 86 of the National Credit Act 34 of 2005 (NCA) provides for the debt relief mechanism envisaged in section 3(g) of the Act by affording the overindebted consumer the opportunity to apply to a debt counsellor for a review of the credit agreements to which he or she is a party and eventually to be declared over-indebted by the court. The effectiveness of the debt review process obviously depends on a positive working relationship between all role players, namely the over-indebted consumer, credit providers and debt counsellor, but also on the extent in which the legislator has succeeded to regulate all aspects of the said process properly. According to a recent newspaper report more than 58 000 consumers have applied for debt review in terms of section 86. However, hardly any of these cases have managed to proceed through our courts. Apart from the lack of co-operation between the said role players, it iscommonly accepted that legislative gaps contribute to the ineffectiveness of the debt counselling process. In First Rand Bank v Smith (unreported case no 24208/08 (WLD)) the court, however, indicated a lacuna in the Act which, it is submitted, was not in actual factpresent in the Act.

scholarly journals Marimuthu Munien V BMW Financial Services (SA) (PTY) LTD Unreported Case No 16103/08 (KZD)

2017 ◽  
Vol 12 (4) ◽  
pp. 332
Author(s):  
Corlia Van Heerden ◽  
Hermie Coetzee
Keyword(s):  
Dispute Resolution ◽  
Financial Services ◽  
Alternative Dispute Resolution ◽  
Crucial Question ◽  
Number Of Factors ◽  
Credit Agreement ◽  
Debt Enforcement ◽  
National Credit Act

Section 129(1)(a) read with section 130(1) and 130(3) of the National Credit Act 34 of 2005 (the NCA) provides that, as a required procedure before debt enforcement, a credit provider must draw the default to the consumer's notice in writing and propose that the consumer refer the credit agreement to a debt counsellor, alternative dispute resolution agent, consumer court or ombud with jurisdiction, with the intent that the parties resolve any dispute under the agreement or develop and agree on a plan to bring the payments under the agreement up to date. Even though section 129(1)(a) is silent as to the method by which the default should be brought to the consumer's notice, section 130(1)(a) provides clarity by requiring the section 129(1)(a) notice to be delivered. It appears that a credit provider who fails to comply with the provisions of section 129(1)(a) prior to debt enforcement by means of litigation will be in a procedural predicament as the credit provider will not possess a complete cause of action thus, for instance, rendering the summons excipiable. The crucial question thus appears to be whether or not in a given situation one may say that there was proper compliance with section 129(1)(a) as this directly affects the existence or absence of a complete and proper cause of action. A number of factors has to be considered in order to address this question, the most important being if the section 129(1)(a) notice was duly 'delivered'. In this regard two questions are especially relevant: a)     When exactly can it be said that a section 129(1)(a) notice was 'delivered' for purposes of the NCA? b)     Is it necessary for such notice to be received by the consumer in order to constitute proper compliance with the delivery requirement pertaining to section 129(1)(a)? The above questions were decided on in a recent judgment, Marimuthu Munien v BMW Financial Services (SA) (Pty) Ltd Case no 16103/08 (KZD) (unreported). This article will analyse section 129(1)(a) of the NCA by inter alia considering the above questions against the backdrop of the particular decision.

scholarly journals To Sequestrate or not to Sequestrate in View of the National Credit. Act 34 of 2005: A Tale of Two Judgments

2017 ◽  
Vol 13 (3) ◽  
pp. 83
Author(s):  
Andre Boraine ◽  
Corlia Van Heerden
Keyword(s):  
Debt Relief ◽  
Debt Restructuring ◽  
Debt Enforcement ◽  
The Impact ◽  
National Credit Act

The purpose of this article is to consider the impact of some of the provisions of the National Credit Act[1] (the NCA) on sequestration applications in the form of applications for voluntary surrender, as well as compulsory sequestration. This matter is of particular relevance in view of two recent cases: in Ex parte Ford[2] the court refused to grant a sequestration order following an application for voluntary surrender since the applicant-debtors did not, according to the court, avail themselves adequately of debt relief measures provided for by the NCA where the bulk of the debt consisted of credit agreements regulated by the NCA; and in a more recent judgment, Investec Bank Ltd v Mutemeri,[3] the respondent-debtors, namely the consumers, opposed an application for compulsory sequestration on the basis that the application for debt restructuring pursuant to debt review in terms of the NCA barred the applicant from proceeding with the application for compulsory sequestration, since they argued that such an application amounted to debt enforcement. This discussion therefore considers the impact of the debt relief remedies and certain special provisions that apply to debt enforcement in terms of the NCA on sequestration procedures provided for in the Insolvency Act[4] in view of the above judgments.[1]      34 of 2005.[2]      2009 3 SA 376 (WCC).[3]      2010 1 SA 265 (GSJ).[4]      24 of 1936.

scholarly journals Alternatives to Bankruptcy in South Africa that Provides for a Discharge of Debts: Lessons from Kenya

2019 ◽  
Vol 22 ◽  
pp. 1-34
Author(s):  
Zingaphi Mabe
Keyword(s):  
South Africa ◽  
South African ◽  
The South ◽  
Insolvency Law ◽  
Debt Restructuring ◽  
Wide Range ◽  
Insolvency Proceedings ◽  
National Credit Act

The problems faced by debtors in South Africa is not that there are no alternatives to insolvency proceedings, but that the available alternatives do not provide for a discharge of debt as with a sequestration order, which is ultimately what the debtor seeks to achieve. Debtors in South Africa can make use of debt review in terms of the National Credit Act 34 of 2005 or administration orders in terms of the Magistrates' Court Act 32 of 1944 to circumvent the sequestration process. However, both debt review and administration orders do not provide for a discharge of debt and provide for debt-restructuring only, in order to eventually satisfy the creditor's claims. Attention is given to the sequestration process and the alternatives to sequestration as they relate specifically to the discharge or lack of a discharge of a debtor's debts. The South African law is compared to Kenyan Law. This article seeks to analyse the alternatives to the bankruptcy provisions of the newly enacted Kenyan Insolvency Act 18 of 2015 in order to influence the possible reform of insolvency law in South Africa. Like the South African Insolvency Act, the old Kenyan Bankruptcy Act (Cap 53 of the Laws of Kenya) also did not have alternatives to bankruptcy. The old Kenyan Bankruptcy Act, however, contained a provision on schemes of arrangement and compositions. The Kenyan Insolvency Act now caters for alternatives to bankruptcy and provides a wide range of alternatives to bankruptcy, some of which allow debtors in different financial positions to obtain a discharge.    

scholarly journals The impact of the credit legislation on consumers

2016 ◽  
Vol 6 (4) ◽  
pp. 503-509 ◽  
Author(s):  
Hlako Choma ◽  
Thifulufhelwi Cedric Tshidada ◽  
Tshegofatso Kgarabjang
Keyword(s):  
South Africa ◽  
South African ◽  
Consumer Protection ◽  
The Other ◽  
The South ◽  
Other Hand ◽  
Credit Agreement ◽  
Financial Obligation ◽  
The Impact ◽  
National Credit Act

The purpose of this paper is to examine two South Africa legislations dealing with over indebtedness of a consumer. It is clear that in terms of the South African law, section 129 (1) and 130 (3) of the National Credit Act provide that a creditor provider who wishes to enforce a debt under a credit agreement must first issue a section 129 (1) (a) notice to the consumer (the purpose of the notice is to notify the consumer of his/her arrears). On the other hand, the South African National Credit Act encourages the consumers to fulfil the financial obligations for which they are responsible. The second legislation to be examined which serve or appear to serve same purpose as the National Credit Act is the Insolvency Act. It therefore, postulated that the compulsory sequestration of a consumer in terms of the Insolvency Act would stand as an alternative remedy for a credit provider before she/he can have recourse mechanisms, such as debt review that are focused on satisfaction of the consumer’s financial obligation , in terms of the provisions of the National Credit Act. The paper determines to what extend these measures comply with the constitutional consumer protection demands. The legislature had been pertinently cognizant of the Insolvency Act when it lately enacted the National Credit Act. This is much apparent from the express amendment of section 84 of the Insolvency Act to the extent set out in schedule 2 of the National Credit Act

scholarly journals Delivery of the Compulsory Section 129(1) Notice as required by the National Credit Act of 2005

2018 ◽  
Vol 21 ◽  
pp. 1-39
Author(s):  
Sarah Govender ◽  
Michelle Kelly-Louw
Keyword(s):  
Supreme Court ◽  
Consumer Credit ◽  
Constitutional Court ◽  
Legal Action ◽  
Legal Costs ◽  
Credit Agreement ◽  
National Credit Act ◽  
Court Of Appeal

In terms of section 129(1) of the National Credit Act 34 of 2005 (NCA), a credit provider first needs to provide a consumer with notice of his default and a list of possible remedies to overcome the default, before enforcing the agreement in a court of law. This ensures that the consumer is given the opportunity to remedy his default by, for example, undergoing debt counselling instead of having to incur legal costs when defending legal action brought against him by the credit provider. Before the National Credit Amendment Act 19 of 2014 came into operation, the NCA neglected to specify how this notice should be delivered to consumers, and this has led to various conflicting decisions. The matter was eventually settled by the Constitutional Court in two separate cases. After the Constitutional Court pronounced on the matter, the National Credit Amendment Act came into operation prescribing the manner in which the notice must be delivered. Consumer-credit legislation that existed prior to the NCA coming into operation generally also made provision for similar notices to be delivered to consumers. In this article we briefly look at how the previous consumer-credit legislation dealt with the delivery of similar notices and also consider how the delivery of notices is currently governed by the NCA. Most of the problematic issues surrounding the delivery of the section 129(1) notice have been resolved, but some still remain. One such example is found in a recent Supreme Court of Appeal case, where despite the correct delivery of the notice to the consumer, the notice caused unintended jurisdictional problems for a credit provider trying to enforce the credit agreement    

Kueski: Revolutionizing Consumer Credit in Mexico

2017 ◽  
pp. 1-10
Author(s):  
Sarit Markovich ◽  
Nilima Achwal
Keyword(s):  
Financial Market ◽  
Financial Services ◽  
Scoring System ◽  
Credit Card ◽  
Consumer Credit ◽  
Credit Scoring ◽  
Loan Approval

This case asks students to step into the role of Adalberto Flores, co-founder and CEO of Kueski, one of the first companies to develop a proprietary algorithm for online loan approval in Mexico. Mexico lacks a standardized credit scoring system, making it difficult for many Mexicans to get approved for a loan or credit card. This, together with the fact that Mexicans generally do not trust traditional banks, makes Mexico an attractive opportunity for fintech companies. Growth, however, could require fintech companies to partner with traditional banks. Students assume the role of Flores to think about the benefits and risks associated with a partnership between Kueski and traditional banks. Students are also challenged to compare the structure of U.S. financial services markets with the Mexican structure and consider the implications on the sustainability of fintech companies in the two markets. The teaching note analyzes the Mexican financial market and the benefits and threats it holds for fintech companies, and outlines a framework for evaluating the risk associated with partnerships.

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