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Speedier resolution of debt disputes?
An estimated 47% of credit-active South Africans are in arrears with their repayments and the huge backlogs in the country’s courts are delaying the legal processes and preventing judgements against credit defaulters from being granted.
A new set of voluntary measures between debt counsellors and banks have been unveiled that will streamline the debt review process and determine a debt repayment package through mediation between the consumers and their creditors.
The proposed measures include greater transparency between credit providers and debt counsellors along with revised repayment terms for over-indebted creditors.
The National Credit Act came into effect three years ago and it was aimed at streamlining the legal processes through a debt-counselling programme and preventing over-indebted people from taking on new debts until the previous contracts had been settled.
Now a task team, appointed by the National Credit Regulator a year ago, has come up with a set of proposals aimed at more rapidly resolving credit disputes that face people who have chosen to enter the debt counselling process.
Paul Slot, spokesperson for debt counsellors in South Africa says the challenge is to get more distressed consumers into the debt counselling process in order to alleviate their plight.
Slot says that at least nine million consumers are in arrears with their accounts in South Africa and yet only 220 000 people have applied for debt counselling.
“The challenge is to get more debt-stressed people into the system,” he says.
The National Debt Mediation Association says it has expanded its capacity to deal with debt counselling dispute mediation in an effort to more speedily resolve disputes and work out a repayment plan for debt-stressed consumers.
Slot says that the Mediation Association hopes that the establishment of this association will mean that disputes can more rapidly be resolved on a consensual basis so that the backlog in disputes is cleared.There are currently 24 000 credit-related cases on court rolls throughout the country and Slot says that this number is certain to increase as more and more consumers find that they are unable to meet their financial commitments.
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