Court cannot release consumer from debt review
The Gauteng High Court (Johannesburg), in a judgment written by Judge Roland Sutherland, has confirmed similar rulings in the Western Cape, KZN and Limpopo divisions, that the High Court does not have jurisdiction to release consumers from debt review.
The judgment stems from an application by two consumers, both clients of debt counsellor Neil Roets, who wanted to be released from debt review because their financial positions had improved to the extent that they could pay their creditors according to the original terms of their credit agreements but could not pay off all of their debts in full, notes a Business Day report.
Without the debts being paid off, Roets was not in a position to issue either with clearance certificates, and they contended that they were trapped in debt review.
They turned to the High Court asking for orders declaring that they were no longer subject to debt review.
The 26-page judgment in the case of the consumer whose debt review application ‘is apparently gathering dust at the office of the court’, Roets can resolve his predicament by presenting his matter to the magistrate together with additional (and new) information about his improved fortunes.
In terms of the National Credit Act, the magistrate ‘must’ conduct a hearing to decide whether or not to grant the debt-review order. In doing so, the magistrate must consider the information before the court, including the consumer’s financial means, prospects and obligations.
In the case of the consumer with a debt review court order, the position is different, the judgment says, according to Business Day. Where a court order has been made, the consumer is bound to debt review until he has paid all his debts as per the debt rearrangement order.
The NCA says the consumer must either pay off all debts in full, or pay off all short-term debts plus catch up on the arrears on home loan or any other long-term loans and revert to paying the original installments.
If the consumer's financial situation improves while in debt review, nothing prevents him/her from paying extra to creditors in order to exit earlier than the terms stipulated in the debt review order.
But if a consumer has not extinguished the over-indebtedness, he/she has no right to exit debt review, and ‘this seems to be a policy choice by the legislature’, the judgment says.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.