Credit Amnesty Bill grants opportunity to clean slate

Private Property South Africa
Engel & VolkersSA

The new Credit Amnesty Bill was received with much anticipation and expectation. Especially for many South Africans living with a track record of unpaid debt, they were presuming this would be their rescuer and a Bill which will remove all traces of current or previous bad credit records. “This is very definitely not the case at all” says Craig Hutchison, CEO of Engel & Völkers Southern Africa. “This credit amnesty Bill does not remove your current debt and you are still responsible to ensure these debts are paid up in full as soon as possible” he urged all consumers.

These new credit amendments were designed to give paid-up consumers amnesty, and the Bill does not suggest that existing debt will be wiped out as from 1 April 2014. Many consumers are misinformed if they presume that their outstanding debt will be cleared. This widespread confusion over the understanding of what the Bill is meant to represent, has resulted in many defaulters not continuing to pay off their bad debt. The Bill was not publicised and explained to the public properly and this has led to the current confusion.

If you have a bad debt record, you will struggle to get any type of loan from a banking or financial institution, so do not be complacent about getting into debt. Control and manage the spending on all your debit and credit cards and keep your family involved in this process. This financial lesson and discipline will be invaluable to their creditworthiness and financial growth in the future. Monitor your spending habits and work to a budget every month.

According to IOL Business Report “Very few of the consumers polled, understood that all the new amnesty Bill meant was that judgments such as “slow paying”, “delinquent”, “defaulter”, “absconded” or “not contactable” would be removed from credit bureau databases and then only when accounts had been paid in full.

Adverse classification on enforcement actions such as “handed over for collection or recovery”, “legal action” or “write-off” would also be removed once payment had been made in full.

Credit bureaus have until April 30 to remove from their record those clients who have repaid their debts, any adverse classification of consumer behaviour and adverse classification of enforcement action.”

So what is necessary for you to know is the following:

  • If you have outstanding debt you need to settle these in full before the credit bureaus will remove your details from their systems and records.

  • Credit bureaus have two months to clear their records of people who have paid their debts and have been adversely classified as "slow paying", "absconded" or "not contactable".

  • Within the amendments are provisions for the National Credit Regulator to remove all adverse credit information and information relating to paid-up judgments.

  • Credit providers must submit all information relating to paid-up judgments to all registered credit bureaus within seven days of receipt of such payments from the consumer.

The value to the consumer of this new Credit Amnesty Bill is to ensure those consumers who have paid their debts in full are no longer blacklisted. Some more good news is that you do not have to go to court to have your judgement rescinded. As many of these consumers have found to their shock they are often negatively affected when applying for jobs, or seeking rental accommodation, requiring a bank loan etc. This Bill is to ensure you have a clean slate with no remarks on your records when you have paid all your outstanding debt in full.

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