NATIONAL CREDIT ACT, 345 OF 2005
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The above Act came into operation on 1 June 2007 and it is important that debt collectors should study the Act as they will be affected by some of the provisions thereof.
Although a newsletter is not the place to discuss the Act, it is, however, deemed necessary to draw the attention of debt collectors to the provisions of section 129 of the Act. In terms of the section the credit provider must notify the debtor in writing that he or she is in default and that the debtor has the right to refer the credit agreement to a debt counselor for debt review. This letter is a prerequisite before a credit provider may commence with further debt enforcement. This notification can only be sent to the debtor once the debtor has already been in default for 20 days. A period of 10 days after the letter has been sent must lapse before the credit provider may commence with proceedings to recover the debt, in other words handing over to an attorney or debt collector for recovery.
Section 86(2) of the Act also contains a very important provision, namely that in terms of this section the consumer (debtor) is prohibited from applying for a debt review in respect of a credit agreement (including incidental agreements) if the credit provider under such an agreement has already proceeded with enforcement of the agreement as a result of the debtor’s default. In other words the credit provider must have sent a notice to the debtor in terms of section 129 of the Act and 10 days had transpired since the date the letter was sent and the debtor did not refer the credit agreement to a debt counsellor for a debt review. If the credit provider has sent a notice in terms of section 129 the credit provider may commence legal or collection procedures and the debtor will be prevented from applying to a debt counselor for a debt review.
In the light of these provisions debt collectors will be well advised, in accepting a mandate to collect a debt, to ascertain from the credit provider whether a letter as required by section 129 of the Act had been submitted by the credit provider to the debtor.
Attention is also drawn to the fact that the Council is of the opinion that the provisions of the Act apply equally to credit agreements, for example for monies loaned and advanced or goods purchased and “incidental” credit eg, for instance under certain circumstances, a medical bill which the medical aid did not pay.
Further information about the Act can be obtained from the NCR’s website at www.ncr.org.za or 086 0627627.
Date Posted: 2013-08-14
Posted By: OVAG Int. SA
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