Clearing issues of credit amnesty
“This time, it is up to the credit bureaus to clear your credit record, along with everyone else’s.
HIGHVELD – Government has implemented a new credit information amnesty that gives all consumers who have default credit listings, a chance to begin on a clean slate from 1 April.
Credit bureaus had until 31 May to remove default credit information and bad payment behaviour.
Yet, between the public and companies alike, there still exists confusion and misinterpretation as to what exactly this entails, as well as what is expected of them.
This regulation involves the once off removal of adverse consumer credit information and paid up judgements and without needing to approach the court to set aside or ‘cancel’ a judgment.
It also includes removals of listings such as: “delinquent”, “default”, “slow payer”, “handed over”, “absconded” and “write-off”.
Consumers do however need to note that this new credit information amnesty does not involve a debt pardon.
Consumers must understand from the beginning that this amnesty does not forgive or write off your debt automatically, neither does it reduce or change the terms of your credit agreement.
It will also not remove the following from your records and you will not be able to obtain new credit if your credit record says “under administration”, “sequestrated” or “under debt counselling”.
According to Ms Chantel Cronje, legal advisor at Legal and Tax, “This credit amnesty is unlike the one implemented in 2007, where consumers needed to follow a certain process to benefit.
“This time, it is up to the credit bureaus to clear your credit record, along with everyone else’s.
“Another major difference is that the new credit amnesty comes with tighter regulations governing how credit providers assess whether you can afford to take on more credit in the future.
“Even with a clean credit record, it may be more difficult to qualify for a loan with the new affordability assessments.
“But this also means that there should be less reckless lending in South Africa, which is to the benefit of consumers and lenders alike,” said Ms Cronje.
These laws are meant to protect poorer consumers with low financial literacy from taking on debt they cannot afford to repay.
Almost 50 per cent of the consumers who obtained new credit defaulted within a year after the 2007 amnesty.
The new credit regulations aim at preventing that from happening again.
This credit information amnesty applies to any South African debt, even if it is owed by a foreign national.
Credit amnesty only affects individual consumers and businesses with an annual turnover of less than a million rand.
Employers and credit providers will still be able to see whether you are currently in arrears on your debt.
Individual credit providers do not have to delete any adverse credit information, but they are not allowed to use the information to make credit decisions.
This is probably the only obscure part of the credit amnesty as a consumer would find it extremely difficult to prove that a credit provider has used this information to deny them credit.
It is also important to note that government has put all the responsibility on the credit bureaus.
Therefore, if after 1 June, you still have any negative credit-related information on your credit record, you can contact the credit bureaus who will then have seven days in which to remove such information.
It would probably be best to send a letter of complaint to each bureau with proof of any paid up, settlement letters or letters of acknowledgement from any creditors that they do not object to any listing being removed.
If your matter is not resolved you can call and lodge a complaint to the Nation Credit Regulator on 0860 627 627 or 0860 NCR NCR, or the Credit Ombud on 0861 OMBUDS (0861 662837).
Consumers must also understand that though the credit listings must be removed within seven days of lodging a query the Regulator and Ombud will be inundated with complaints, so realistically they will have to be patient.
In order to check your credit record you can obtain copies from the following credit bureaus:
Transunion – 0861 51 41 31
Experian – 0861 10 56 65
Expert Decision Systems – 0861 482 482
Compuscan – 0861 51 41 31
Consumer Profile Bureau – 010 590 9505
To get a better idea of your credit record, consumers can at any time request a detailed credit report from any of the bureaus listed above and should know that no other person or third party can request a credit report on behalf of the consumer.
For any further queries, visit https://www.legalandtax.co.za, call 0860 LTS LTS (587 587) or email info@legalandtax.co.za.
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