What Debts Are Not Covered by Debt Review in South Africa?

The basic rule

Debt review operates on credit agreements as defined in the National Credit Act. Section 86(7)(c)(ii) lets a court re-arrange 'the consumer's obligations' under those agreements. If an obligation is not a credit agreement under the Act, a debt review order does not re-arrange it.

That does not make the obligation disappear. It means it sits outside the process and you still have to deal with it, under whatever law governs it.

Obligations that are not NCA credit agreements

The most common ones people are surprised by:

• Tax debt owed to SARS. It is a statutory debt under the tax legislation, not a credit agreement, and it is not re-arranged by a debt review order. SARS has its own deferred payment and compromise processes - approach SARS about those separately.
• Court-ordered maintenance. Maintenance is a court obligation under the maintenance legislation, not credit. A debt review order does not vary it. If you cannot afford your maintenance order, the route is a variation application in the maintenance court.
• Traffic fines and criminal penalties. Not credit agreements.
• Municipal rates and service accounts, in the ordinary course. These are generally not NCA credit agreements, although arrangements over arrears can take different forms - ask your debt counsellor about your specific account.

This list is illustrative, not exhaustive. The test is always whether the obligation is a credit agreement under the Act, and your debt counsellor applies it to your actual accounts. Section 4 of the Act also excludes certain agreements from the Act's application entirely.

Agreements already under enforcement are excluded

Section 86(2) is specific: an application for debt review may not be made in respect of, and does not apply to, a particular credit agreement if, at the time of the application, the credit provider under that agreement has already proceeded to take the steps contemplated in section 130 to enforce it.

That is one agreement excluded, not the whole application. But it is a strong reason not to delay: every week you wait is a week in which a credit provider might start enforcement and take that agreement out of reach of the process.

If you have already received legal documents on any account, tell your debt counsellor before you apply, not after.

Secured debt: included, but read this carefully

Both secured and unsecured credit agreements can go into a debt re-arrangement. Your home loan and your vehicle finance are credit agreements and can form part of the plan.

What a re-arrangement does not do is cancel the credit provider's security. Section 86(7)(c)(ii) gives the court power to extend the period and reduce payments, to postpone payment dates, to do both, or to recalculate obligations after contraventions of the Act. None of those remove a bond or a credit provider's rights in the financed vehicle.

Section 88(3) is what holds enforcement off while the review runs properly - it bars a credit provider that has received notice from exercising or enforcing by litigation or other judicial process any right or security under the agreement, subject to sections 86(9) and (10), and it falls away if you default on the re-arrangement.

So the honest answer to 'is my car safe in debt review' is: it is protected while the process is running properly and you are performing under the plan. It is not made permanently safe, and the security is still there. Anyone who tells you debt review guarantees you keep your assets is overselling it.

Debts you did not list

Regulation 24(1)(b)(iv) requires the application to list all debts, including home loans, furniture and clothing retail accounts, personal loans, credit cards, overdrafts, educational loans, business loans, vehicle finance and leases, and sureties you have signed.

A credit agreement you leave off the form does not get notified under Form 17.1, is not part of the proposal, and does not get the benefit of the process. Sureties are the ones most often forgotten. So are old store accounts that have been handed over. List everything and let the debt counsellor sort out what qualifies.

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