Relief for indebted consumers

JUDGMENT: APPLICANTS CAN EXIT DEBT REVIEW PROCESS ONCE SHORTER-TERM DEBTS ARE SETTLED

Court gives clarity after debt counsellor refuses to issue clearance certificates.

Arecent judgment by a full bench of the High Court in Johannesburg paves the way for thousands of consumers under debt review to rehabilitate themselves.

The judgment is good news for those who went under debt review without a magistrate making it an order of court.

Provided they have settled their short-term debt obligations, but not their mortgage or other long-term debts, they can ask their debt counsellors to issue a so-called clearance certificate and have their credit records sanitised at the credit bureaus.

This means they can once again access the credit markets.

But for others with a magistrates’ court order placing them under debt review, the path to redemption is more arduous. The National Credit Act introduced the concept of debt review to assist overindebted consumers and to freeze any legal action against them. However, they are shut out of the credit market until released from debt review.

The applicants in the case were Hermanus Janse van Vuuren and Fabrian Nel; both are consumers who ended up under debt review but whose circumstances changed, allowing them to service their original credit agreements.

Their debt counsellor, however, refused to issue them clearance certificates so they decided to seek clarity from the court.

According to court papers, Van Vuuren applied for debt review in 2015. A year later, his financial position had improved to the