Bond originators serving the South African residential property market have, in the last few weeks, had to deal with a small flood of enquiries regarding the new government Credit Amnesty Act, says Mike van Alphen, the National Manager of the Rawson Property Group’s bond origination division, Rawson Finance.
The act, says van Alphen, has been misunderstood by some people: they appear to think that it exonerates them from paying any debt incurred before 1st April 2014. Such debts, they somehow assume, have miraculously been ‘written off’.
“It is extremely naïve to think that any government anywhere in the world could enact such a law,” says van Alphen. “It would be the height of irresponsibility to do so.”
What the act does do, says van Alphen, is to assist anyone who has a black mark (a negative report) on their credit records if this was incurred before 1st April and they have since paid off the debt in full. In these cases the new act stipulates the misdemeanour has to be expunged from all South African credit records.
Similarly, says van Alphen, anyone who has a court judgment against him dating from before 1st April on account of a debt and has since paid the amount in full must have the record of the judgment with the credit bureau cleaned up completely.
In terms of the act, says van Alphen, the paid up former debtor is also entitled to have all negative comment on his credit performance deleted from the credit records. Commonly used phrases such as ‘slow payer’, ‘delinquent’, ‘not contactable’ or ‘absconded’ have to be expunged and any negative action taken against the debtor, e.g. ‘handed over’, ‘repossessed’ or ‘legal action taken’, has also to be deleted from the credit records, provided full payment has been made.
The credit bureaux were given until 1st June this year to bring about these changes so by the time this appears in print all records should have been cleaned up. However, the onus is still on the debtor to produce proof that he has made the necessary payments.
Any negative classifications of repayment behaviour or enforcement actions after 1st April 2014 may and will be reflected, on the credit report into the future as the amnesty only covers behaviour and actions prior to 1st April 2014.
Whilst in the past, judgements were reflected on the credit record for a period of five years and/or until such time as the client had the judgement rescinded by a Court, from the 1st June 2014, the Credit Bureau must remove the record of the judgement within seven days of the client supplying proof that the debt was repaid in full. The client no longer needs to incur legal costs to bring a court application to have the judgement rescinded and/or removed from his credit record.
“It is therefore still important,” says van Alphen, “for all credit consumers to maintain regular payments on outstanding debts to avoid any legal action being taken against them as this may well nullify the assistance the amnesty may have afforded him or her into the future.”
Van Alphen reminds debtors that all South African citizens are entitled to one free credit record per annum. This can be obtained from www.mytransunion.co.za. They can also be called at 0861 482 482.
