Your rights when you have debt #WorldConsumerRightsDay

In South Africa, the Consumer Protection Act of 2008 is the main piece of legislation that seeks to safeguard consumers.

Among other things, it sets out norms and standards, promotes a consistent legislative and enforcement framework and prohibits unfair marketing and business practices.

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Benay Sager, chairman of the National Debt Counsellors’ Association, explained that while the Act was the primary law aimed at protecting consumers, it wasn’t the only piece of legislation to do so. Another is the National Credit Act.

Like the Consumer Protection Act, the National Credit Act, and its regulations, provide a swathe of provisions aimed at ensuring consumers aren’t harmed. For example, it requires that credit providers make sure an applicant is able to afford the repayments before approving a loan.

“This is an incredibly important provision in a country such as South Africa. The National Credit Act provides protection for consumers in the form of debt counselling and provides the legal framework that enables this to be done in a safe and transparent manner,” said Sager.

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Anyone has the right to approach a registered debt counsellor. If you are applying for debt counselling and are married in community of property you need to do so with your spouse.

Sager said understanding whether you were over-indebted was the first step. To determine this, the debt counsellor will conduct a comprehensive financial assessment.

“If you are overindebted and then decide to apply for debt counselling, the counsellor informs all your creditors and the credit bureaus. If your creditors accept, the debt counsellor then renegotiates reduced monthly payments on all credit agreements that fall under the National Credit Act,” explained Sager.

You have the right to work through your debt counsellor to interact with the creditors. Creditors should no longer contact you directly about outstanding debt but instead, contact the debt counsellor.

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“Along with your rights, you also have some obligations that come with the debt counselling process. Once the restructuring process is concluded, the debt counselling agreement is approved by a court or the National Credit Tribunal. You are then required to make one affordable payment each month, which is distributed to creditors via an independent Payment Distribution Agency,” said Sager.

Sager concluded that once you’ve cleared your unsecured debt and are up to date on your bond payments – if you have a bond – then you have the right to receive a clearance certificate. The debt counsellor issues you a clearance certificate, confirming all the accounts listed under the agreement are paid up.

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