ENFORCEMENT OF A CREDIT AGREEMENT WHERE THE CONSUMER HAS APPLIED FOR DEBT REVIEW IN TERMS OF THE NATIONAL CREDIT ACT 34 OF 2005 First Rand Bank v Smith (unreported case number 24208/08 (WLD))

Section 86 of the National Credit Act 34 of 2005 (NCA) provides for the debt relief mechanism envisaged in section 3(g) of the Act by affording the overindebted consumer the opportunity to apply to a debt counsellor for a review of the credit agreements to which he or she is a party and eventually to be declared over-indebted by the court. The effectiveness of the debt review process obviously depends on a positive working relationship between all role players, namely the over-indebted consumer, credit providers and debt counsellor, but also on the extent in which the legislator has succeeded to regulate all aspects of the said process properly. According to a recent newspaper report more than 58 000 consumers have applied for debt review in terms of section 86. However, hardly any of these cases have managed to proceed through our courts. Apart from the lack of co-operation between the said role players, it iscommonly accepted that legislative gaps contribute to the ineffectiveness of the debt counselling process. In First Rand Bank v Smith (unreported case no 24208/08 (WLD)) the court, however, indicated a lacuna in the Act which, it is submitted, was not in actual factpresent in the Act.