National credit amendment bill, debt relief for consumers

It is an established fact that a lot of South Africans are struggling with debts. Recent statistics show that out of the 23 million credit-active consumers in the country, over 42% are considered impaired. This means that they have been in arrears for three or four months or have judgments against them.  Most of the debt accrued by households and individual point to vehicle asset finance, fixed term agreements, credit cards and store cards. The good news is that parliament is in the final stages of processing a National Credit Amendment Bill that seeks to provide relief to people in debt.

The National Credit Amendment Bill which is currently under review before the Portfolio Committee on Trade and Industry has received mixed reviews from financial institutions and labour unions. Here is what you need to know about this bill.

  1. The draft bill seeks to extinguish the debt of consumers who earn a gross monthly income of no more than R7,500 have unsecured debt amounting to R50,000.
  2. Treasury estimates this could write-off between R13bn and R20bn.
  3. The debt extinguishing implementation period provided for is 48 months.
  4. The bill expands the National Credit Regulators (NCR) functions to suspend credit agreements considered to be reckless.
  5. The minister under the bill would be empowered to adjust the maximum gross monthly income of a debt relief applicant and adjust the total qualifying unsecured debt.
  6. The bill proposes a range of new criminal offences for people who operate as credit providers without being registered with the NCR.

Who will be eligible for debt relief?

  1. Individuals earning less than R7‚500 per month.
  2. Individuals who have no readily realisable assets (assets or investments that can be sold quickly).
  3. Individuals who are not subject to debt review.
  4. Individuals who have less than R50 000 debt outstanding.

The National Credit Amendment Bill once signed into law will make a difference in many peoples lives.

  AUTHOR
Caxton Central

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