A comparison between formal debt administration and debt review - the pros and cons of these measures and suggestions for law reform (Part 2)

• DOI: 10.10520/EJC135278
• Date: 01 January 2012
• Author: Andre Boraine,Melanie Roestoff,Corlia Van Heerden
• Published date: 01 January 2012
• Pages: 254-271

254

A comparison between formal debt

administration and debt review–the pros

and cons of these measures and

suggestions for law reform (Part 2)

André Boraine

BIur LLB LLM LLD

Professor and Dean of the Faculty of Law, University of Pretoria

Corlia van Heerden

BLC LLB LLM LLD

Associate, Professor Department of Mercantile Law, University of Pretoria

Melanie Roestoff

BLC LLB LLM LLD

Professor, Department of Mercantile Law, University of Pretoria

OPSOMMING

’n Vergelyking tussen formele skuldadministrasie en skuldhersiening –

die voor- en nadele van hierdie maatreëls en voorstelle vir

regshervorming

Ongeveer ’n dekade gelede het die Departement van Justisie en

Konstitusionele Ontwikkeling, na aanleiding van klagtes deur verbruikers oor

die misbruik van die administrasieprosedure, ’n projek ter hervorming van

hierdie prosedure van stapel gestuur. Hierdie projek is egter opgeskort

vanweë ’n onafhanklike inisiatief van die Departement van Handel en

Nywerheid om verbruikerswetgewing, wat in 2007 in die Nasionale

Kredietwet 34 van 2005 gekulmineer het, te hervorm. Ongelukkig het die

wetgewer met die invoering van die skuldhersieningsprosedure ingevolge die

Nasionale Kredietwet ’n gulde geleentheid laat verbygaan om die reg insake

skuldverligtingsmaatreëls behoorlik en volledig te hersien. Daarbenewens het

die wetgewer ook nie die verhouding tussen skuldhersiening en ander

bestaande skuldverligtingsmaatreëls, in die besonder administrasiebevele,

behoorlik oorweeg nie. In die eerste gedeelte van hierdie artikel wat in 2012

De Jure

80

verskyn het is administrasie ingevolge die Wet op Landdroshowe

32 van 1944 en skuldhersiening ingevolge die Nasionale Kredietwet

geanaliseer om sodoende sekere positiewe en negatiewe aspekte rakende

hierdie twee prosedures te identifiseer. In hierdie tweede gedeelte van die

artikel word ’n vergelyking tussen administrasie en skuldhersiening gedoen

en voorstelle ter regshervorming gemaak. Die skrywers doen aan die hand

dat Suid-Afrika ’n volledige hersiening van sy huidige skuldherskedulerings-

maatreëls benodig en dat die wetgewer vir een enkele maatreël wat op alle

skuldherskeduleringsgevalle van toepassing is, voorsiening moet maak. Na

aanleiding van die vergelyking tussen administrasie en skuldhersiening belig

die skrywers die hoofkwessies wat die wetgewer na hul mening in ag moet

neem wanneer so ’n nuwe prosedure ontwerp word.

A comparison between formal debt administration and debt review (Part 2)

255

4 Some Comparisons Between Administration

and Debt Review

4 1 Gateways

4 1 1 Monetary and Other Limitations

As indicated, administration applications have a monetary cap of

R50,000, whereas debt review has no monetary cap. It is submitted that

this cap excludes many debtors from the relief offered by way of an

administration order, especially those debtors whose debts are not of a

credit agreement nature and who are thus not eligible for debt review.

Debt review applies only to credit agreement debt to which the NCA

applies whereas administration is not subject to such limitation.

However, administration orders may not include

in futuro

debt whereas

it appears that many of the debts included under debt review in terms of

the NCA will be of an

in futuro

nature.

It should further be noted that whereas the administration procedure

appears to address the issue of over-indebtedness only by providing for

restructuring of debt, debt review in terms of the NCA addresses the issue

of both over-indebtedness and reckless credit as the debt counsellor is

obliged to consider same and the court can be approached later to order

debt restructuring to cure over-indebtedness and also to declare credit

reckless.162

In terms of section 86(2) of the NCA credit agreement debt may not

be included in the debt review where the credit provider has already

taken steps to enforce the agreement.163 However, with regard to

administration orders, judgment debts are included in the order. In terms

of section 74P(2) of the MCA the court in which proceedings have been

instituted against a debtor in respect of any debt164 must suspend such

proceedings as soon as it has received notice of the administration

order.165

There is no statutory limitation on the number of times a debtor may

apply for administration or debt review.166 Therefore, it appears that a

162 S 86(6) & 87(1)(b). A declaration of reckless credit may in some instances

have the effect of relieving a consumer from the debt altogether. For a

detailed discussion see Boraine & Van Heerden “Some observations

regarding reckless credit in terms of the National Credit Act 34 of 2005”

2010

THRHR

650 and Van Heerden & Boraine “The money or the box:

Perspectives on reckless credit in terms of the National Credit Act 34 of

2005” 2011

De Jure

44.

163 See the discussion in par 3 3 1 above.

164 Except a debt due under a mortgage bond or a debt referred to in

s 74B(3)–s 74P(2) MCA.

165 See the discussion in par 2 7 above.

166 See, however,

Changing Tides 17 (Pty) Ltd v Grobler

(unreported case no

9226/2010) (GNP) par 12 where it was held that a consumer is not entitled