Regulations do not permit consumers to get away with not paying their debts

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It is important to note that there is no such thing as the Credit Amnesty Act. On 1 April 2014 a credit amnesty was brought into law in the form of Regulations which were published in the Government Gazette by the Minister of Trade and Industry in terms of section 171 of the National Credit Act No 34 of 2005, and which Regulations detail the procedure to be followed by creditors and registered credit bureaus in relation to the amnesty.

The Minister argues that the Regulations are meant to encourage, and provide an incentive for, consumers to pay their debts and that it was necessary to implement these Regulations in order to curb unemployment, assist consumers in acquiring accommodation and again allow consumers access to affordable credit.

Certain terms contained within the Regulations have been defined and it is important to understand what the definition of those terms mean so that you, the consumer, may know the scope of the amnesty available to you.

Subjective opinions

Briefly, 'Adverse Consumer Credit Information' relates to subjective opinions of creditors who have listed a consumer (reporting someone as a delinquent, in default, slow paying, absconded or not contactable) and also refers to action taken by a credit provider to enforce non-payment of any debt (reporting someone as being handed over for collection or recovery, legal action instituted or indicating that the debt has been written-off). It also refers to details and results of disputes lodged by consumers (irrespective of the outcome) and finally also includes adverse consumer credit information contained in a consumers payment profile represented by a mark, symbol, sign or in any manner or form.

'Paid up judgments' refers to civil court judgment debts, including default judgments, where the consumer has settled the capital amount under the judgment. The Regulations have created a windfall for consumers in two ways, firstly in that all adverse consumer credit information reported to credit bureaus before 1 April 2014 shall be removed, and secondly in that all information held by credit bureaus relating to judgements which have been paid up shall also be removed and shall continue to be removed after 1 April 2014 on an on-going basis.

Consumers shall no longer need to go to court to rescind a judgment granted against them as the regulations have provided for procedures which would allow Paid Up Judgments to be removed easily and without having to incur legal costs, thus affording consumers an opportunity to have future judgments easily removed from their credit history, even after 1 April 2014.

Two-month period expired<>/b

Registered credit bureaus had a two month period, which expired on 1 June 2014, in which to remove all Adverse Consumer Credit Information and information pertaining to Paid Up Judgments from consumers' credit histories. Within three days of the registered credit bureau removing the information, it has to notify all other registered credit bureaus of such removal and those registered credit bureaus have to remove the same information from their systems within three days of being notified.

Initially the obligation to remove information pertaining to Paid Up Judgments was that of all the registered credit bureaus but now, after expiry of the two month period, credit providers are now obligated to submit all information necessary for the removal of a judgment from a consumers credit history. A credit provider has seven days from receiving a proof of payment from a consumer to submit the proof of payment and other necessary information to all registered credit bureaus and the registered credit bureaus shall have seven days to remove the judgment from a consumer's credit history. A credit provider may not use or re-list adverse credit information and information relating to judgments that have already been removed.

There has been an outcry by landlords, employers, rental agents and credit providers alike (all of whom rely on a consumer's credit history to make informed business decisions), that the Regulations would clear consumers of any adverse credit information, which would result in the aforementioned persons not being able to determine whether a consumer is financially responsible.

Judgments will be visible

Experian, a registered credit bureau, has stated that a consumer's payment and behaviour information will not be entirely removed unless all of the information that comprises it falls into the definition of 'Adverse Consumer Credit Information', and that the payment profiles of consumers will still be available for credit providers to peruse.

Judgments taken against consumers will still be visible on their credit history's for a period of five years from judgment or until the judgment has been paid up in full. A consumer's credit history will also still indicate whether a consumer is in the process of debt counselling, administration or sequestration.

In conclusion, the Regulations do not permit consumers to get away with not paying their debts. The Regulations do not permit the deletion of all information and portions of a consumer's credit history is still available for landlords, employers, rental agents, credit providers and others to view. The Regulations are aimed at helping those consumers which have taken all possible steps to clear their negative credit histories by paying up their debts.