'Unconstitutionality of s 89(5)(c) of the National Credit Act.' DR, Jan/Feb 2013:56 [2013] DEREBUS 23

'Unconstitutionality of s 89(5)(c) of the National Credit Act.' DR, Jan/Feb 2013:56 [2013] DEREBUS 23

High Court comes to assistance of victims of reckless credit!

In Absa Bank Limited v De Beer and Others the Pretoria High Court has finally taken action against the granting of reckless credit by creditors.

In this case Absa continued to grant credit to an elderly couple even though it was evident that they would not be able to repay the loan. Absa also relied on a surety as extra security for the loan.

The court held that Absa was reckless in granting the further loans as it was evident that the consumers including the surety would not be able to repay the loan amount.

Absa mainly relied on the value of the property being secured as security.

This is not new as similar loans have been found to be reckless by other courts as well.

What is interesting of the above judgement is that the consumers, including surety, was relieved of all obligations in terms of the loan. They were therefore allowed to keep the property and the court ordered the bond to be cancelled.

It will be interesting to see if Absa will double down and refer the case to the Supreme Court of Appeal.

Read more at the link below.

http://www.jordaanattorneys.co.za/Court-Cases/Absa-Bank-v-De-Beer-and-others/

South Africa grapples with worst drought in 30 years!

There are various reasons why consumers find themselves in a situation where there are unable to pay their debts. Most of the time, from our experience, the cause is due to circumstances outside of the consumer's control.

It is a well-known fact that our country is currently experiencing one of the worst droughts in the recent memory. The situation is aggravated by the fact that the previous two years were also stricken plagued by drought.

Farmers are especially vulnerable as creditors are expecting full payment within a year for production credit. The creditors also take extensive security over the assets of the consumer, in this case the farmer.

Luckily, farmers are not excluded from the advantages provided by the National Credit Act. They too can apply for debt review and restructure the production credit agreements to be repaid during a longer period.

They will then be put in a position to continue the farming enterprise as they will not lose their assets.

http://www.bbc.com/news/world-africa-34884135

Standard Bank v Visagie

The High Court Bloemfontein confirmed that a Credit Provider has to prove that a notice in terms of Section 86(10) which terminates the debt review process must be served on a consumer.

Read more at: http://www.jordaanattorneys.co.za/Court-Cases/Standard-Bank-v-Visagie/

Standard Bank v Mkhwanazi

The Durban High Court confirmed in this case that the 10 days afforded to a consumer to reply to a notification in terms of Section 129 of the National Credit Act starts to run after the notice has been delivered to the post office of the consumer and the notification sent.

Unless the credit provider adheres to this time period the summons will be premature if issued within the 10 day period.

Please read more at: http://www.jordaanattorneys.co.za/Court-Cases/Standard-Bank-v-Mkhwanazi/

Firstrand Bank Ltd v Nkata

The Supreme Court of Appeal (SCA) upheld an appeal against the order of the high court which had re-instated a credit agreement, relying on the provisions of s 129(3) of the National Credit Act 34 of 2005 (the NCA). The SCA, after an extensive review of the case law in South Africa and England, as to the meaning of civil execution, held that re-instatement was prohibited in terms of s 129(4) of the NCA after a sale in execution had taken place. The meaning of ‘execution’ had not been defined in the NCA. Referring to the fact that execution referred to a process rather than a single event, the SCA held that, in terms of s 129(4) of the NCA, the decisive event was the sale in execution at a public auction. Contrary to the high court, the SCA found that reinstatement in terms of s 129(3) had to occur prior to the sale in execution and not prior to the transfer of immovable property, consequent upon a sale in execution. The SCA found that this interpretation was required, inter alia, in order to ensure public confidence in auctions held in execution and that it was in the interest of both consumers and credit providers generally that this confidence be maintained in order to maximise the prices for which purchasers would bid at these auctions.

Read more at http://jordaanattorneys.co.za/Court-Cases/Firstrand-Bank-Limited-v-Nkata/

Insights on the benefits of debt counselling