National Credit Act practical implementation

[duncan drennan]

You can load a spell checker for your browser just Google it for the browser you are using. Load it and you have it.

Or you can use Firefox which has a built in spell checker...

[Rebel]

More than happy to have you here, Rebel.

On spelling - I normally leave spelling errors unless they are in the thread title, but I'll be more than happy to play secretary and run spellchecks on your posts if you like.

Thanks Dave - I do type slower than my thoughts and then forget to review.

[Dave A]

The National Credit Regulator (NCR) has asked the Pretoria High Court to provide clarity on the interpretation of the debt review provisions in the National Credit Act, it said on Wednesday.

This, after finding that most debt restructuring proceedings in magistrate’s courts were not being finalised because of differing views on the proper interpretation of these provisions.

"This had, and continues to have, a major impact on debtors in desperate need for relief by way of debt rearrangement orders as well as on credit providers whose debts are not being serviced," the regulator said in a statement.

"The NCR is of the view that the debt review proceedings should be as inexpensive, expeditious and informal as possible, given that debtors in need of debt re-arrangement are hardly in a position to go through expensive and time consuming court procedures, nor is it likely that such debtors can afford legal representation," it said.

However, it added that its application was opposed by the four major banks, the Credit Providers Association of South Africa, the Furniture Traders' Association of South Africa, Onecor (Pty) Ltd and a debt counsellor.
full story from Business Report here

If the National Credit Regulator is seeking clarity, why the opposition from the banks et al?

[garthu]

From our point of view NCA has had really little to do with the banks willingness to lend. When it first came about, it had impact but minor. Money running out seem to have alot though... weird!!

[Reagen]

The NCA,34 of 2005

The NCA, were fully implemented June 2007, this meant that over-indebted consumers could now approach a registered Debt Counsellor with the intent of having his/her debt obligations restructered, this meant that a Debt Counsellor would negotiate with creditors a reduced installement over an extended period of time.

Restructuring often proved very difficult, due to the fact that household debt is currently measured at 78%, which means for every hundred rand that we have, R78.00 goes towards outstanding debt, thus leaving the consumer with less disposable income. Furthermore, Industry decided on certain norms in order to expedite the process and ensure more consent eg. They agreed that morgage repayments be restructured in line with a term of 320 months, vehicles 84 months, credit cards 60 months. However the plight of the consumer is that not even these terms could be realised, the next sensible thing was to reduce the interest on a particular agreement.

The NCR approached the Pretoria High Court for clarification on the process of obtaining a consent/restructered order as the NCA is silent on the process and Magistrates thus refer to the Magistrates Court Act, which opens up issues ranging from locus standi of Debt Counsellors, Monetary value, jurisdiction to name a few. The NCR is of the opinion that the process should be as informal and inexpensive as possible, the rule 55 application in terms of the Magistrates Court Act proves otherwise.

In line with enforcements of credit agreements, section 127 lays out the voluntary surrender, whereby a consumer applies for a credit agreement to be cancelled, and section 129 the procedure in enforcing an agreement. This provided that before a creditor can enforce any agreement notice should be served on the customer advising him/her that they are in default. Affording the customer with the option of referring the matter to a Debt Counsellor, by way of applying for Debt Review in terms of section 86 of the said Act.

The NCR expressed that they are optimistic that the court would clarify matters in order for over-indebted consumers to access the envisaged relief as set out.

Lets hope that by the 5th of March the court would grant the order and not direct the matter to DTI, this would be to the detriment of over-indebted consumers.

Cheers

[Rebel]

Now that we are a few years down the line with the NCA - do you still hold this view ?

[Rebel]

How do you feel about all the "pains" the NCA introduced into consumers lives ?

[Dave A]

How do you feel about all the "pains" the NCA introduced into consumers lives ?

What "pain"?

The only one that bugs me as a consumer is the monthly admin fee banks introduced on credit agreements. Apart from that, haven't really noticed anything that's much more of a pain than it ever was before.

[Rebel]

Dave,

yes the R 50 pm gets a bit much on each account - the pains I am talking about is:

1 1.8 mil families wants to go under debt review.
2 SA has 1,663 registered Debt Counsellors BUT only 300 active and practising as such.
3 The Mag Courts are jammed and only give dates for DC hearings in 2011 first quater.
4 43 Debt Counsellors has stolen the publics money.
5 Over-indebtedness tests to abtain new credit is impossible for Joe avagare Soap.
6 Only 160,000 families so far under debt review - since July 2007 - when will we see the others helped.

Thought

[Dave A]

Let's have a look at those then:

1 1.8 mil families wants to go under debt review.

An option they didn't have before - is this a pain?

2 SA has 1,663 registered Debt Counsellors BUT only 300 active and practising as such.

Invent a new job and there are bound to be shortages. OK - that's a pain, and one the regulators should have seen coming.

3 The Mag Courts are jammed and only give dates for DC hearings in 2011 first quater.

No change there

4 43 Debt Counsellors has stolen the publics money.

Nothing new there either - happens all over in every industry. May the bastards go to jail.

5 Over-indebtedness tests to abtain new credit is impossible for Joe avagare Soap.

These are the people that shouldn't be getting credit anyway, right? Is this a pain? Or is the NCA actually succeeding in achieving one of its objectives?

6 Only 160,000 families so far under debt review - since July 2007 - when will we see the others helped.

When the over-indebted can afford to pay enough for debt counsellors to make real money. This was the obvious stumbling block cynics were pointing out pretty much from early drafts. The broke don't pay very well.

To my mind, the obstacles for the over-indebted to dig their way out of debt were always there - the conduit has just changed a touch.

[Rebel]

Let's have a look at those then:

An option they didn't have before - is this a pain?

Invent a new job and there are bound to be shortages. OK - that's a pain, and one the regulators should have seen coming.

No change there

Nothing new there either - happens all over in every industry. May the bastards go to jail.

These are the people that shouldn't be getting credit anyway, right? Is this a pain? Or is the NCA actually succeeding in achieving one of its objectives?

When the over-indebted can afford to pay enough for debt counsellors to make real money. This was the obvious stumbling block cynics were pointing out pretty much from early drafts. The broke don't pay very well.

To my mind, the obstacles for the over-indebted to dig their way out of debt were always there - the conduit has just changed a touch.

Dave - you have just won $ 500,000,000 - pain is that we have NO facility to transfer it to you as the number must be transferred in a single transfer and the banking system to do so has yet to be developed. The Goverment of the day promised consumers an alternative debt resolution mechanism and that is much needed as R 1,8 billion is at stake - but you have to wait - meantime the debtor drowns. It would have been NO PAIN if the NCR comnpleted the system - tied all the belts and checked the bells - and then released the solution. Now we have a half pregnant situation. That's the pain !

[Dave A]

To reinforce the point on the over-indebted not paying very well, I heard a news flash a day or two ago that 50% of people who are supposed to be paying instalments under a rescheduled debt agreement are in default on their payments.

Some people simply don't pay no matter what you do for them.

[AndyD]

I think there's a couple of common stumbling blocks for people who are choosing whether to work through their debt or whether to 'sod it' and just default on everything and ride out the five year blacklisting.

The law is certainly something you can hide behind if you in debt. The cost and time involved in litigation for creditors to recover monies owed and the pitiful settlement terms often given will almost certainly favour the person in debt.

Many have found themselves so far in over their heads that without light at the end of the tunnel it's just easier to give up and default.

Others consider themselves as victims. Victims of a recession they have no control over. Victims of greedy creditors who are trying to take them to the cleaners. Victims of who knows what....... but it's certainly not their fault. Things that go wrong never are their fault.

[Dave A]

This story shows it takes a lot more than just enabling legislation to succeed.

This week, banks, along with the National Credit Regulator and the Debt Counsellors' Association of South Africa (DCASA), launched a campaign to help people come to terms with their indebtedness.

The figures are frightening. Out of the 17-million people who have some form of debt, 47% have fallen more than three months in arrears with their payments. That means that nearly eight million South Africans are over-indebted.

The problem is that often people are too afraid to face their financial situation and ignore the growing problem until it is too late. This campaign is aimed at encouraging people to take action before it is too late.

---

One of the problems is that debt counselling has not been a resounding success. Although about 190 000 people have applied for debt counselling, the majority have withdrawn or terminated their debt-review process.

Only about 90 000 people remain in active debt review, and of those only 57 000 are making regular payments. About R200-million is paid each month to creditors through debt counsellors, and a total of around R2,5-billion has been recovered. Currently about 7 000 people apply for debt counselling each month.
full story from M&G here

[Rebel]

The Facts or F(r)iction of the NCA

See my notes below

Let's have a look at those then:

An option they didn't have before - is this a pain?

I think it is false and misleading the public when you tell someone that they have an option and then they pay for the option but receive shotty service for whatever reason. We should have rather waited with the option till the nuts and bolts were in place. Through this in-effective "thing" lots of people got more into trouble * yes I agree some were trying to escape their debt but some had no alternative - not even admin orders because their debt were more than R 50k - we read about the man in the FreeState who shot his family and then himself because he had no way out with his debt.

Invent a new job and there are bound to be shortages. OK - that's a pain, and one the regulators should have seen coming.

No not shortages - inefficiencies on the side of the NCR who did not put into place better training before giving a license to do debt counselling. Imagine what do I know with a matric certificate and R 50 bucks - minimal qualification to become a debt counsellor !!!

These are the people that shouldn't be getting credit anyway, right? Is this a pain? Or is the NCA actually succeeding in achieving one of its objectives?

Hey !!! credit makes the wheels of business turn NOT cash !!! Wrong on your side - The NCA stopped the right people getting credit and also the people who did not qualify - so we end up with little credit being granted and that removes the oil from business.