Upon invoice of the clearance certificate, the nationwide credit register or credit bureau was obliged to expunge specific information concerning the debt rearrangement from its records. The nevertheless, effected considerable modifications to area 71( 1 ), (2 ), (3) and (4 ) (). The amended subsections now provide that a customer whose debt has been re-arranged in terms of Part D of Chapter 4 be released with a clearance certificate by a debt counsellor within seven days after the customer has (a) pleased all the obligations under every credit contract that underwent that debt re-arrangement order or contract, in accordance with that order or arrangement; or (i) financial capability to satisfy the future responsibilities in regards to the rearrangement order or arrangement under (aa) a home mortgage agreement which protects a credit contract for the purchase or enhancement of unmovable residential or commercial property; or (ii) that there are no financial obligations in the re-arranged arrangements contemplated in subparagraph (i); and (iii) that all commitments under every credit contract consisted of in the re-arrangement order or contract, besides those pondered in subparagraph (i), have been settled completely.
The amended area 71( 3) supplies that if a debt counsellor "chooses not to issue or stops working" to release a clearance certificate as considered in section 71( 1 ), the customer may apply to the Tribunal to examine that choice (). If the Tribunal is satisfied that the consumer is entitled to the clearance certificate it may order the financial obligation counsellor to provide it.
If the debt counsellor fails to do so, the consumer might file a certified copy of the clearance certificate with the NCR and lodge a problem with the Regulator against the financial obligation counsellor. Upon receiving a copy of a clearance certificate, a credit bureau or the nationwide credit register need to expunge from its records the details contemplated in section 71( 5 ), as shown in par 3.
Area 71( 6) that requires a credit bureau, upon receiving a copy of a court order rescinding any judgment, to expunge from its records all info connecting to that judgment, was not changed by the 2014 Modification Act. Neither was area 71( 7 ), which makes it an offense for a credit bureau to fail to abide by a compliance notice relating to the commitment to expunge details.
In March 2017 the NCR suggested in a circular that the changed section 71 posed interpretation and execution obstacles and tape-recorded the following "descriptions" concerning the analysis of the amended section 71: The word "contract" refers to the debt counselling proposal and not to the legal arrangement; a vehicle finance agreement is not a "long-lasting arrangement"; and a debt counselling order need not be rescinded prior to a clearance certificate can be issued - can a voluntary exit from debt review remove the flag.
Until such time, debt counsellors need to use the procedures currently utilized for examining over-indebtedness when assessing the customer's monetary ability to satisfy future obligations in regards to area 71. . In the occasion that a credit supplier, in reaction to a paid-up letter from a debt counsellor, encourages that the debt has actually not been settled completely, both celebrations should use the industry agreed-upon process, still to be released, as standards for end balance distinction.
Rather, the consumer would take advantage of the concessions in section 71 only for the remaining repayment term as defined in the debt restructuring arrangement. Afterwards, the legal responsibilities would use. From the aforesaid, it is hence clear that the amendments to section 71 were effected to prevent a customer, who goes through a debt rearrangement or restructuring order, being "locked into" the debt evaluation procedure for several years to come, although he has in fact paid back all his reorganized short-term debts and only his home loan financial obligation or other long term credit debt still needs to be repaid under the restructuring order.
However, this may not always hold true for this reason the requirement that the consumer show an "ability to pay back" the mortgage or long-lasting credit agreement debt prior to being launched from the debt review procedure and offered a clearance certificate. Also, customers who have successfully repaid their reorganized short-term financial obligation would not want to be shackled by the inability to get in into brand-new credit arrangements for several years into the future due to the reality that they still have to repay home loan financial obligation or other long-lasting credit financial obligations that were included in the debt restructuring order.
Essentially, area 71 envisages that a customer who has actually paid up all his restructured short-term credit obligations ought to be able to show that he is no longer over-indebted as considered in section 79, and therefore that he is now able to timeously repay his credit arrangement financial obligations. Alternatively, he must at least be able to show that even if he is still a bit over-indebted, after having paid off his short-term debt, his monetary position is however such that he will have the "capability to repay" his long-lasting credit obligations as restructured, and when the restructuring term has expired that he will have the ability to effect payments in accordance with the initial contractual terms.
The 2014-amendments to section 71 likewise serve to ease the customer of the responsibility to take the effort to obtain a clearance certificate and to have his name cleared at the credit bureaus, which is a welcome intervention from a consumer security viewpoint - what to do to exit debt review. These responsibilities have now been troubled the financial obligation counsellor, who is spent for his financial obligation counselling services and who is obliged to provide a clearance certificate promptly, specifically within 7 days after the conditions in section 71( 1) are satisfied - .
It is also now the financial obligation counsellor's commitment to participate in to the elimination of the consumer's name from credit bureau records (what is debt review removal). As suggested in paragraph 2 above, provision is made in section 86( 10 )( a) and (b) of the NCA for a credit service provider to terminate a pending debt review prior to the filing of a financial obligation restructuring application at the Magistrate's Court in particular situations, for example where no development is made with the debt review and/or the restructuring proposition is not feasible.
Especially, area 71 appears to cater for the situation where the financial obligation review process has basically run its course insofar as reorganized short-term credit financial obligation is worried. Nevertheless, situations have over the years arisen where either consumers or financial obligation counsellors wished to withdraw from a continuous financial obligation review at numerous phases prior to having paid up the reorganized debt in accordance with area 71 (as it originally read) - what is the difference between debt review and debt counseling ().
4, which was not initially prescribed in the Act or guidelines, but that was crafted by the credit market itself to help with voluntary withdrawal from debt evaluation. However, in it was held that a financial obligation counsellor who attempted to "withdraw" a financial obligation evaluation in accordance with Kind 17. 4 acted the NCA.
4. what is a debt review court order. As an outcome of the choice in Rougier v Nedbank Ltd, the NCR provided Withdrawal Guidelines on 19 February 2015 (that is, after the 2014 Modification Act (which amongst other things amended area 71) was signed, however prior to the said amendment Act entered result). These Withdrawal Standards were needed to be applied by all industry individuals with immediate impact and were planned to replace the usage of the Form 17.
The Withdrawal Guidelines also pertinently validate, in line with the Rougier judgment, that a financial obligation counsellor does not have the statutory powers to terminate or withdraw from the debt evaluation procedure and for that reason that a debt counsellor can no longer provide a Kind 17. 4 for such a (purported) function.
It mentions that a customer can "withdraw" from or "terminate" the debt review process only prior to a "declaration" of over-indebtedness in accordance with area 86( 7) (therefore, by a court) and (prior to) the providing of a Kind 17. 2, based on payment of financial obligation counselling charges. It also rather confusingly states:" [I] f a is made and no court order is in place, the customer will remain under financial obligation evaluation." This recommendation to a "decision" appears to relate to the scenario where the financial obligation counsellor has made a determination as needed by section 86( 6 ).
The aforesaid need to read with the, which was consequently released to help the interpretation of the. The is drafted in a somewhat complicated and rather recurring way. It once again validates that financial obligation counsellors can no longer withdraw from the debt review procedure which making use of Form 17.