U-turn on plans to write off billions of rands of debt in 2018

Debt - [Google Images]

The National Credit Amendment Bill has gained significant public attention after it proposed writing off billions of rands worth of debt from every-day South Africans.

The bill permits a person who, at 24 November 2017, earns less than R7,500 per month and who owes less than R50,000 in unsecured debt relating to credit agreements, to make an application to the National Credit Regulator for debt intervention.

However, the bill has also been a major cause of concern, especially in the banking sector, where questions have been raised around what would happen with all this owed money and the potential effects on the economy should this money be written off.

As a result of these concerns, the bill is set to be completely re-worked to address any issues and bring it in line with the Constitution, reports Legalbrief’s Pam Saxby.

Bad news for those looking to write-off debt

One of the the key changes expected to be made, is to scrap the sub-clause stating that debt intervention should be prescribed.

This means that South Africans who meet the above criteria of earning less than R7,500 and who owe less than R50,000, will no longer be able to automatically apply for debt intervention.

Instead, it proposes that a regional disaster or exogenous shock causing widespread job losses should be the only circumstances in which the Minister has the power to prescribe measures to alleviate household debt.

Other changes that could be worked into the bill are whether it applies retrospectively (i.e to those South Africans who qualify before the bill comes into law), as well as a number of other Constitutional clarifications.