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Clarity on writing off of debts

by | May 10, 2022 | Personal Finance

In a bid to assist overindebted consumers effectively address their debt problem, president Cyril Ramaphosa announced the National Credit Amendment Bill as an extension of the National Credit Act (NCA) of 2005 on 19 August 2019.

According to previous reports the Bill was introduced to address the gaps in previous government interventions on over-indebtedness and to provide sufficient relief for low-income consumers. Qualifying applicants include those who have accumulated unsecured debt of more than R50000 and receive no income or earn total gross monthly income of R7500 or less. These applicants may apply for debt intervention with the National Credit Regulator (NCR), and should they be found to be unable to meet the NCR re-arranged terms of their credit agreements the NCR must refer them to the National Credit Tribunal. The Tribunal may, among other things, suspend the applicant’s obligations, in part or entirely, under the qualifying credit agreements for a period of 12 months, which may be extended for a further 12 months. Subsequently then, the Tribunal is empowered to expunge some debts.

However, before you fall for fraudsters claiming to be government officials who can assist you with writing off your debt, be aware that the National Credit Amendment Bill is not yet effective. It has further been met with much criticism from credit providers stating that they might be forced to implement stricter lending measures for lower income consumers to counterbalance their high risk.

Debt Counselling under the NCA of 2005, currently in effect, has been assisting millions of South Africans successfully deal with their debt problem for over a decade. Having assisted many overindebted consumers over the years, National Debt Advisors is well equipped to help you through your tough economic situation.

When you go under our debt review programme, our qualified debt counsellors can, under provisions in the NCA, also assist with the writing off of prescribed debt and debt resulting from reckless lending.

Generally, prescribed debt is debt that has expired and which a credit provider may no longer collect. This is any debt over three years old that has not been legally summoned or otherwise pursued by the creditor, as well as debt that has not been acknowledged or paid toward prior to their expiration date. Please note, however, that a judgment debt and a debt secured by a mortgage bond only expires after 30 years.

According to the NCA, reckless lending is when creditors grant credit without conducting an affordability assessment (including a credit bureau record check). Creditors are also obligated to ensure that the consumer fully understands and appreciates the consumer risks, costs, and obligations of the proposed credit agreement prior to signing up for the product to avoid being considered reckless lenders. Finally, if credit is granted in spite of an affordability test revealing that the client is over-indebted or will become over-indebted should they be granted the credit, then the client has been a victim of reckless lending.

As part of our debt counselling service, NDA offers free credit checks, during which we evaluate all of your credit agreements to see if any of them might be categorized as reckless lending. In the event that we believe that any of your accounts are reckless, we can seek to have them declared reckless by the court or tribunal on your behalf.

Contact us today and find out whether we can have any of your debt lawfully written off.

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