SA Debt Collectors Scramble as New Law Looms
South African debt collectors are in a last-minute push to collect outstanding debts before the implementation of new amendments to the National Credit Act (NCA). The amendments, gazetted on March 13th, will prevent debt collectors from pursuing expired debts.
The key change is that if a consumer hasn't acknowledged a debt (verbally or in writing) for over three years, the debt is considered prescribed and unenforceable.
Neil Roets, CEO of Debt Rescue, cautions consumers that any payments or promises to pay within the three-year period will keep the debt valid. He also notes that if a creditor has not issued a summons within three years, the debt may be prescribed.
Roets reports a surge in last-minute collection attempts by debt collectors and creditors hoping to beat the new law.
The amendments are expected to significantly impact emolument orders (garnishee orders), as many debts these orders are based on will now be prescribed.
The buying and selling of prescribed debt was previously a lucrative business.
A significant benefit for indebted consumers is that credit providers are now prohibited from taking legal action against a debtor once a court date has been set for debt review. This strengthens the position of debt counselors and makes debt review a more attractive option for managing debt.
The amendments also tighten affordability assessment requirements for lenders before granting loans, potentially making unsecured credit harder to access for consumers.
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