Overly indebted South Africans could have their debt written off in 2019. National Council of Provinces has passed the National Credit Amendment Bill and President Cyril Ramaphosa will sign it into law.
How will the bill benefit over-indebted South Africans
The bill applies to those who are over-indebted and have no way of getting themselves out of the trenches.
The bill suspends debts for those who qualify, in part or in full, for up to two years. This may help those who are in debt to improve their situation.
If their situation does not improve, after the
suspension period, then their debts may be scrapped completely.
The criteria for having your debt written off
- If the unsecured debt is not more than R50 000.
- If the unsecured debt is as a result of unsecured credit agreements and unsecured credit facilities.
- If the person earned an amount of R7 500 or less per month for the last six months.
The bill hits back at fraud
The bill, in addition, clamps down on fraud.
The bill not only eases the pain of debt for South Africans, but it also regulates offences regarding debt more rigidly.
According to the new bill, it is an offence to submit false information related to debt intervention.
Anybody who changes their financial situation to qualify for debt intervention will also be guilty of these offences according to the new bill.
While many South Africans are jumping for joy at the passing of this bill, South African banks are not very happy.
Not everyone happy about the bill
The Banking Association of South Africa has clearly stated that it does not support this bill as it will affect the credit and lending sectors.
Banks would inevitably
need to make the requirements to acquire debt more rigid and this does not
benefit the poor.
In addition, banks will need to write off debts of South Africans and this would mean additional costs.
Peter Attard Montalto, an analyst for Intellidex, was quoted by businesstech as saying:
“This bill is of serious concern to the banking sector and could, through the imposition of a new income-based personal insolvency and debt affordability regime, force losses on the banking sector of around R25 billion.”