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South African Professional Debt Mediation Association Intervenes for Consumers

Friday, October, 28, 2011

In South Africa, professional debt mediation provides an important plank of the National Credit Act originally passed in the spring of 2007.  Even though the law has not been able to meet all expectations held for it at the time, it has been successful in assisting consumers that find themselves in over their heads with excessive debt to secure some relief for their financial obligations.


Debt Mediation Part of Debt Review Process


According to the NCA, consumers are entitled to a debt review process during which their creditors are barred from pursuing court action against them.  This debt review process must last at least 60 days, during which consumers can obtain assistance from debt mediation firms.  However, even after the 60 day period has elapsed, a high court or magistrate court “can reinstate a review application,” according to the CEO of the National Debt Mediation Association, Magauta Mphahlele.


Mphahlele also commented that because of the NDMA's actions, creditors have granted extensions in almost 50% of the cases in which they are requested.  Additionally, more than 50% of actions to repossess vehicles purchased on credit have been rescinded when the NDMA has intervened in those cases.


The NCA has also assisted consumers by specifying a cap on the amount of interest that can be added on top of an existing loan. 


The NCA did not address issues of probate mediation in South Africa.