The National Credit Amendment Act (NCA) was signed into law in 2019. The Act included provisions for debt relief. This is not a way to avoid your debt obligations and you need to understand what it really means.

This is a free debt review process for consumers earning less than R7 500 a month and who have debts of less than R50 000. The debt review will be provided by the National Credit Regulator (NCR). Qualifying consumers will have their debts restructured so they can repay them over 60 months. This could include reduced interest rates. During the debt review process the individual may not access any further credit and their credit record will be flagged. The consumer will have to undergo financial education so that they learn to better manage their finances.

Existing judgements are not included which means if legal action has commenced on a credit agreement, then that credit agreement will be excluded. So, debt relief will not stop calls from debt collectors.

Debt will only be expunged in certain circumstances where the individual has no income or if their income is not enough to pay their debts within five years. They will have their agreements suspended for 12 months, which can be extended for a further 12 months. If they have still not found work after 24 months, then the debt can be expunged. If the debt is expunged, this information will reflect on the credit bureau for a further 12 months. This means those consumers will remain out of the credit environment for three years and will negatively affect their credit record.

This process will not be available for some time as the Regulator must still put systems in place to provide the debt intervention service. This is likely to take another year. In the meantime, consumers need to continue to meet their repayments or make arrangements with their credit providers. If they default and a judgement is brought against them before they can access the debt intervention measures, those debts will not qualify for debt intervention.