Die effek van die Nasionale Kredietwet op die sekwestrasieprosedure
Gey van Pittius, Eileen Ann
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This study investigates the effect of the debt counselling procedure, as well as the other provisions of the National Credit Act, on the choice of the debtor or creditor to make use of the sequestration procedure in terms of the Insolvency Act. The Insolvency Act and the procedures it makes available are discussed in detail. There are two distinguishable options, namely voluntary surrender and compulsory sequestration, and particular focus is placed on the 'advantage to creditors' requirement. This requirement is of the utmost importance because the court will seldom if ever grant a sequestration order if it cannot be proven that the creditors will gain at least some form of benefit from it. The ‘advantage’ requirement is also applicable with regards to compulsory sequestration, but the onus of proof is not as strict as with voluntary surrender. The aim of this requirement is to protect creditors so that they could at least recover part of their debt. The second chapter deals with the procedure in accordance with section 74 of the Magistrates Court Act, referred to as an administration order. This is another type of debt relief available to debtors. However, there are strict requirements that have to be met before a debtor will be allowed to make use of this procedure. These requirements include that the debt owed by the debtor should not exceed R50 000 and the composition of the debt should not be complicated. This procedure is not applied very often as very few debtors owe less that R50 000. The procedures brought into life by the Credit Act are of the utmost importance for this study. The Credit Act added various new terms to the law, including overindebtedness, reckless credit, debt counselling and debt review. Each of these terms’ meaning and their effect on current procedures, as prescribed by legislation, are analysed. Following various court judgments it has become clear that the Credit Act has in fact changed the legal position drastically. In my opinion the debtor is afforded much more protection in terms of the Credit Act when it is compared to the protection that he received in terms of the Insolvency Act. Various mandatory steps were added which a creditor, or credit provider in terms of the Credit Act, must comply with before he will be allowed to claim a debt from a debtor, or consumer in terms of the Credit Act. This creates a situation where the creditor is sometimes disadvantaged since the debtor is granted a reprieve and the period he is allowed to repay his debts is often extended without the consent or input from the creditor. As soon as a debt restructuring order has been made by court, the creditor cannot take the decision on review. Regarding the relationship between insolvency procedures and debt review, it has happened on more than one occasion that creditors as well as debtors have made use of sequestration procedures only then to be forced by the courts to rather make use of debt review. This means that both creditors and debtors no longer have a choice regarding which procedure, and in accordance with which act, they would like to pursue. I am of the opinion that despite this there still is a place for both procedures in South African law. The best procedure to follow would depend on the special circumstances of each individual case.
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