National Credit Act >> Affect of Credit Act on Attorneys
NEW LEGAL TERMS AND CONCEPTS
Information provided by "The Law Society of South Africa "
NEW - Click here to order your ITC credit report now - NEW
NEW - Click here to order your EXPERIAN credit report now - NEW
Terms like “over-indebtedness” and “reckless lending” are key concepts
which have changed the basis on which
credit is granted and go far beyond simply
checking the credit records. Sections 79,
80 and 81 of the NCA deal with these
critical, new concepts, and provide that:
Credit is lent recklessly if:
• either the credit provider took
no steps to assess the proposed
consumer’s general understanding
and appreciation of:
- the risks and costs of the
proposed credit agreement
and
- his rights and obligations
under the agreement; and
- his debt repayment history for
credit;
- existing financial means,
prospects and obligations
and
- whether there is a reasonable
basis to conclude that any
commercial purpose may
prove to be successful, if the
consumer has such a purpose
in applying for the credit; or
• having conducted an assessment,
the credit provider still entered
into the credit agreement with
the consumer despite the fact that
the preponderance of information
available to the credit provider
indicated that the consumer did not
generally understand or appreciate
his risks, costs or obligations under
the proposed credit agreement; or if
entering into that credit agreement
would make the consumer overindebted.
The NCA imposes this second leg as so many consumers are first-time users of credit, and even seasoned credit users do not always understand how, once they have bound themselves to pay, they will be forced to honour their commitments.
Over-Indebtedness is defined as follows:
A consumer is over-indebted if the preponderance of available information at the time a determination is made indicates that the consumer is or will be unable to satisfy in a timely manner all the obligations under all the credit agreements to which the consumer is a party, having regard to that consumer’s;
• financial means, prospects and
obligations; and
• probable propensity to satisfy in a
timely manner all the obligations
under all the credit agreements to
which the consumer is a party, as
indicated by the consumer’s history
of debt repayment.
The NCA provides that whenever a credit agreement is being considered in any court proceedings, the court may declare the credit agreement reckless. If a court declares that a credit agreement is reckless because the credit provider failed to make a proper assessment or if it did make the assessment but still entered into the agreement even though the consumer did not generally understand or appreciate the risks, costs or obligations under the agreement, the court may make an order:
• Setting aside all or part of the
consumer’s obligations under that
agreement, as the court determines
is just and reasonable in the
circumstances; or
• Suspending the force and effect of
the credit agreement and may then
issue an order:
- suspending the force and
effect of that credit agreement
until a date determined by the
court; and
- restructuring the consumer’s
obligations under any
other credit agreements, in
accordance with the Act 9.
TOP CREDIT ACT LINKS
Nca Faq
Personal Loans
What the credit bureaus say about the credit act?
Is the national credit act affecting me?
National Credit Regulators - Ncr.org.za
